As millions of Americans head for the beach this Labor Day weekend, ManufactureThis thought it important to revisit a recent Economic Policy Institute (EPI) study that found the U.S. losing 2.3 million jobs to China since 2001.

Losing jobs to China is an unfortunate consequence of our mammoth, ongoing trade deficit with Beijing.  Not everyone finds the situation troubling, though.  Ohio’s Chamber of Commerce tried to spin Ohio’s 102,700 jobs lost to China since 2001 as a mere drop in the bucket compared to an alleged 25 million jobs lost in China over the last decade or so.

EPI’s Rob Scott fired back with a brief paper that rebuts the Chamber’s in accurate assessment of his report.  ManufactureThis is happy to present Scott’s rebuttal, which is available here.  It should make for relaxing reading as everyone heads off for a long weekend.

A happy safe labor day.

##

Profiteers and apologists:  EPI responds to flak from the U.S. Chamber of Commerce and others on The China Trade Toll (EPI, July 30, 2008). 

By Robert E. Scott
Economic Policy Institute
Washington, DC

Who speaks for Ohio’s workers and manufacturers? 

In a recent, widely reported study, I showed that growing trade deficits with China have cost the United States 2.3 million jobs over the past six years, including 102,700 jobs lost in Ohio (Columbus Dispatch Online, 7/30/08).  This study has been widely criticized by the U.S. and Ohio Chambers of Commerce and by other business groups (Columbus Dispatch Letters to the Editor, 8/16/08).   These PR attacks are full of inaccurate and erroneous information. 

For example, the Chamber claims that China lost 25 million manufacturing jobs between 1992 and 2004.  In fact, China created nearly 10 million manufacturing jobs between 2002 and 2005, when their burgeoning trade surplus was decimating U.S. manufacturing.  Judith Banister is the Conference Board expert on this issue (hired by the U.S. Bureau of Labor Statistics) and she reports that Chinese manufacturing employment has increased in this period. 

On this issue, the Chamber is using ancient history to hide the truth:  China’s illegal subsidies, cheap currency, and other unfair trade practices have beggared the U.S. and their other trading partners and are largely responsible for the growth of their own manufacturing industries.  These policies have also enriched many of the domestic and foreign companies on the Chamber’s board, firms such as Nike, IBM, CVS, Safeway, Toyota, and Siemens. 

The Chamber also claims that imports from China are “replacing imports from another foreign country”.  In fact, China’s primary competitors are other major exporting nations in Asia, including Japan and the newly industrializing countries; they have maintained large, stable trade surpluses with the United States, in excess of $100 billion in every year since 1998.  Furthermore, these countries have directly benefited from China’s growing world trade surplus.  China and its other Asian trading partners have created a regional trade and production system that is generating growing trade surpluses with the rest of the world, both in absolute dollars, and as a share of their GDP.

Ohio’s large, industrial base has been decimated by growing trade deficits in this decade.  The state has lost 223,000 manufacturing jobs since March, 2001 alone.  It is one of two states (the other is Michigan) where employment has declined since 1998.  My report estimates that the growing trade deficit with China has displaced 102,700 jobs in Ohio since 2001, including 75,600 jobs in manufacturing.  These losses have contributed to the decline of Ohio’s industrial base, and to the loss of high-wage jobs in service industries that support the manufacturing sector. 

Nearly 1,200 Ohio manufacturing establishments closed between 2001 and 2006 according to the Census Bureau. This figure includes 22 plants that employed over 1,000 workers that have closed or reduced employment, a quarter of the largest plants in the state.  The Chamber does not speak for businesses that no longer exist, nor for workers without jobs or the communities where they have lived.  My study was based on the most widely used economic models of the effects of changes in trade on U.S. labor demand.  These models have become the “industry standard” used by nearly all serious analysts in the trade debates. 

##

  It happens that China is already the world’s leading producer of both carbon dioxide and sulfur dioxide due to a vast manufacturing base that follows little in the way of emissions controls.

Apparently, though, carbon emissions from China’s electric power sector will increase by roughly 30% in 2008, and will surpass the total emissions of the U.S. electric power industry, according to a report from the Center for Global Development.

According to the study, both China and India are becoming somewhat more efficient in energy use, but rapid growth in both countries means a doubling of carbon emissions from their power plants over the next dozen years.

The EPA estimates that one-fourth of all California air pollution now comes from China.  With China simultaneously ramping up production and disregarding many environmental standards, it seems more and more necessary for the U.S. to examine the consequences of our trade policies and china’s practices.

##

  Yes, ManufactureThis often kvetches about China’s persistent currency manipulation.  After all, the practice is illegal under WTO law.  And it is responsible for a good part of Beijing’s mammoth annual trade surplus against the U.S.  And the 30-40% de facto subsidy it gives to Chinese exporters is helping to undercut U.S. manufacturers, which puts more American factory workers out of jobs.

But sometimes the ManufactureThis crew actually has to stop what we’re doing and say, “Pinch me—I must be imagining this.” 

As if China’s brazen flouting of world trade law isn’t enough, the London Telegraph reported today that Beijing has now “resorted to stealth intervention in the currency markets to amass US dollars.”

What exactly is China’s latest ploy?

According to HSBC Asia, “China’s central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention.”  HSBC’s Daniel Hui estimates that the “pretext of reserve requirement hikes” amounts to nearly $50 billion in June 2008 alone.

China has boosted their “reserve requirement” for domestic banks five times since March, requiring them to store dollar reserves on such a massive scale that it is now affecting world currency markets.  The Telegraph terms this “covert buying,” and believes it may help to explain “at least part of the explosive dollar rebound over recent weeks.”

And so, once again, the U.S. is confronted with brazen market distortions on the part of China.  It might be fun to ask the presidential candidates, and in particular free trade advocate John McCain, just what they think of China’s latest tactics.  Would they applaud such brazen self-interest?  Or would they say, “This ain’t kosher and it needs to stop.”  Either way, something has to give.

##

  With the economy and jobs top of mind among voters, concern about the state of U.S. manufacturing is spreading.  Right now, the Alliance for American Manufacturing (AAM) is working doubletime to get front and center at both the Democratic and Republican national conventions to make sure we keep up the momentum.
 
We kicked things off last Thursday, August 21, with a national Town Hall meeting in Denver televised in primetime on C-Span.  You can view C-Span’s coverage of our event by clicking here.  

The Denver Post also reported on the Town Hall. 

Our Denver Town Hall helped highlight the urgency of saving U.S. manufacturing jobs at precisely the moment when 50,000 Democratic leaders were rolling into Denver for the Democratic national convention, with millions more watching on TV. 
 
AAM wants to make sure that we keep educating our nation’s leaders at this crucial time.  We see some headway in the latest draft of the Democratic Party platform, which offers strong, specific language on trade policy similar to AAM’s goals. 
 
Specifically, the platform notes: “We will enforce trade laws and safeguard our workers, businesses, and farmers from unfair trade practices–including currency manipulation, lax consumer standards, illegal subsidies, and violations of workers’ rights and environmental standards. We must also…stop countries from continuing unfair government subsidies to foreign exporters and non-tariff barriers on U.S. exports.”  
 
The Republican Party will be releasing their platform soon as well.  You can bet we’ll stay on top of them, and will keep asking “What are you going to do about China?  How will you enforce our trade laws and strengthen U.S. manufacturing?” 

It’s not enough just to go to Denver and talk about manufacturing.  AAM has also placed multiple full-age ads in National Journal’s “Convention Daily” editions for both Denver and St. Paul. 
 
Tens of thousands of convention attendees will swarm both cities.  We want to remind these delegates of the millions of good-paying jobs we’ve lost in recent years due to our ongoing trade deficit with China. 
 
You can view a copy of our latest ad now by clicking here.

##
 

Pre-Convention Forum to Highlight U.S. Jobs Lost to China
Town Hall Meeting Will Focus on Trade Agenda for Next President

Thursday, August 21 – 6:30 p.m. – Mile High Station, Denver, Colorado

DENVER – On the eve of the Democratic National Convention, a panel of trade experts, business and labor leaders, and elected officials will lead a discussion on the devastating impact the growing trade deficit with China is having on American jobs and manufacturing, and outline what the new president needs to do about it.

The U.S.-China trade imbalance has cost 2.3 million American jobs between 2001 and 2007, according to a report released last month by the Economic Policy Institute.  Every state lost jobs, with Colorado shedding 33,800.  These displaced workers lost an average of $8,146 in wages last year as they moved to lower-paying jobs.  Nearly a third of the displaced workers had college degrees and more than 500,000 jobs were lost in high-tech advanced technology products. 

The Alliance for American Manufacturing, which is sponsoring the town hall meeting, has called on presidential and congressional candidates to make strengthening manufacturing and holding China accountable top priorities in the fall campaign, and outline an agenda that includes getting China to honor its commitments on trade and stop illegal dumping, subsidies and currency manipulation.

WHAT: Keep It Made in America Town Hall Meeting.  Learn why manufacturing is so important to good jobs and national security, and how China’s unfair trade practices are threatening the future of manufacturing.  Free admission.

WHEN: August 21 – 5 p.m. dinner; 6:30 p.m. event

WHERE: Mile High Station
 2027 West Lower Colfax Avenue, Denver, Colorado

WHO: Sponsored by the Alliance for American Manufacturing, a nonpartisan partnership of leading U.S. manufacturers and the United Steelworkers.  Panelists will include:

• Scott Paul, Executive Director, Alliance for American Manufacturing
• Mike Cerbo, Executive Director, Colorado AFL-CIO
• Dave Anderson, Director, Colorado Springs Manufacturing Task Force
• Chris Nevitt, Member, Denver City Council

##

ManufactureThis’s Steven Capozzola is taking a week off for summer vacation.  The consensus is that he needs a brief respite.  In his absence, ManufactureThis will feature guest columns from Scott Paul and Chris Traci.

While Steven is away, the Olympics will be in full swing.  Beijing will be on display to the world–including its human rights violations, lack of media freedom, and a disregard for environmental norms that has made China the world’s number one producer of both sulfur dioxide and carbon dioxide.  China also happens to contribute 1/4 of all of California’s air pollution, by the way, so West Coast USA will want to take a good look at the smog permeating the Olympic events.

In the interim, ManufactureThis encourages our readers to give a read through a recent EPI report, ‘The China Trade Toll.’  It shows how the huge, ongoing U.S. trade deficit with China has cost 2.3 million U.S. jobs since 2001.  In more tangible terms, it helps explain the huge sums of money use to bankroll China’s Olympic team this summer.

Happy fishing.

##

  The Washington Post reported that Olympic gold medalist and outspoken Darfur activist Joey Cheek had his visa revoked by the Chinese embassy prior to flying to Beijing.

Cheek is the founder of Team Darfur, a human rights group protesting violence in Darfur.  Beijing has known ties to the regime in Sudan.

##

  On Tuesday–just three days before the opening of the Summer Olympics, Chinese police apologized for roughing up two Japanese journalists.  The episode adds another question mark to Beijing’s commitment to foreign media access.

##

AFP reports that Beijing still has smoggy skies, just a few days before the start of the Summer Olympics.