Unknown fact: Chinese exports create American jobs

Unknown fact: Chinese exports create American jobs

The U.S. Government is planning a new complaint to the arbitrator division of the World Trade Organisation (WTO), this time against Chinese automobiles and automotive parts. At the same time Heritage Foundation released some surprising facts what Chinese exports in apparel and toys do to American jobs

The report from US Heritage Foundation reveals in an analysis that accurate data for something as complex as the value added along a supply chain is very difficult. Yet the study is in line with a growing body of research demonstrating the contributions of Chinese exports to American prosperity.

Believe it, or not, but Chinese apparel and toys supported in the USA in 2010 a total of 576000 jobs! This is one of the findings of a report of the Wall Street Journal.

Also in a paper from the Asian Development Bank Institute in 2010 was concluded that each iPhone 3 G exported from China to the U.S.A., entering over a decade with a declared value of USD 178.96, only USD 6.50 of that value was clearly attributable to China, where the phones underwent final assembly. Much of the remaining value was accrued to Koreans, Japanese and Americans who produced the components and shipped them to China for manufacture. Also the entirety of the mark-up between the imported value and the final sale price on the iPhone (ranging from 50 % to 100 % of the declared import value) accrued to Americans, and included profits for Apple, payments to shipping and logistics firms and margins for retailers.

Another analysis of the economists at the U.S. Federal Reserve Bank of San Francisco of 2011 was putting the focus of their research on all the American value added to “made in China” products and their finding was that up to 55 US cents of every USD spent on such a product actually goes to Americans who design the products, manufacture components that are shipped to China for final assembly, transport the goods, market and retail them, finance their production and trade, etc. Another finding was that a growing number of “Made in America” products contain imported components from China. Since China joined the WTO a decade ago the Chinese Content in American-assembled finished goods has roughly doubled to 2.9 % in 2010. There are mostly American products that would be more expensive for U.S. and global consumers, or simply impossible to produce on American soil without imports from China.

On the other hand it is also true that America has been losing 2.7 million jobs between 2001 and 2011 due to Chinese exports to the U.S. and based upon the figures from the Economic Policy Institute in August, 2012. But these figures might be doubtful, because they are based upon the fact that a product not manufactured in China would automatically be made in America which is obviously not the case as demonstrated above.

It has to be added that there are also jobs in retailing, advertising and the like and these would exist regardless of where the product is manufactured, but in reality those jobs and jobs in a variety of ancillary services, such as iPhone app development or e-commerce – might never have existed if imports from China would not have boosted American purchasing power by lowering prices to spur consumption.

www.wsj.com


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