Costly Trade With China: Millions of U.S. jobs displaced with net job loss in every state
Contrary to the predictions of its supporters, China's entry into the World Trade Organization (WTO) has failed to reduce its trade surplus with the United States or increase overall U.S. employment. The rise in the U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 U.S. jobs. Most of these jobs (1.8 million) have been lost since China entered the WTO in 2001. Between 1997 and 2001, growing trade deficits displaced an average of 101,000 jobs per year, or slightly more than the total employment in Manchester, New Hampshire. Since China entered the WTO in 2001, job losses increased to an average of 353,000 per year—more than the total employment in greater Akron, Ohio. Between 2001 and 2006, jobs were displaced in every state and the District of Columbia. Nearly three-quarters of the jobs displaced were in manufacturing industries. Simply put, the promised benefits of trade liberalization with China have been unfulfilled.
As a matter of policy, China tightly pegs its currency's value to that of the dollar at a rate that encourages a large bilateral surplus with the United States. Maintaining this peg required the purchase of about $200 billion in U.S. Treasury Bills and other securities in 2006 alone.1 This intervention makes the yuan artificially cheap and provides an effective subsidy on Chinese exports; best estimates are that the rate of this effective subsidy is roughly 40%. China also engages in extensive suppression of labor rights; it has been estimated that wages in China would be 47% to 85% higher in the absence of labor repression. China has also been accused of massive direct subsidization of export production. Finally, it maintains strict, non-tariff barriers to imports. As a result, China's exports to the United States of $288 billion in 2006 were six times greater than U.S. exports to China, which were only $52 billion (Table 1). China's trade surplus was responsible for 42.6% of the United States' total, non-oil trade deficit. This is by far the United States' most imbalanced trading relationship. Unless and until China revalues (raises) the yuan and eliminates these other trade distortions, the U.S. trade deficit and job losses will continue to grow rapidly in the future.
Major findings of this study:
The 1.8 million jobs opportunities lost nationwide since 2001 are distributed among all 50 states and the District of Columbia, with the biggest losers, in numeric terms: California (-269,300), Texas (-136,900), New York (-105,900), Illinois (-79,900), Pennsylvania (-78,200), North Carolina (-77,200), Florida (-71,900), Ohio (-66,100), Georgia (-60,400), and Massachusetts (-59,300) (Table 2A).
The 10 hardest-hit states, as a share of total state employment, are: New Hampshire (-13,000, -2.1%), North Carolina (-77,200, -2.0%), California (-269,300, -1.8%), Massachusetts (-59,300, -1.8%), Rhode Island (-8,400, -1.8%), South Carolina (-29,200, -1.6%), Vermont (-4,900, -1.6%), Oregon (-25,700, -1.6%), Indiana (-45,200, -1.5%), and Georgia (-60,400, -1.5%) (Table 2B).
http://www.epi.org/publications/entry/bp188/