Workers show to visitors an inflatable chicken that local media say bears resemblance to U.S. President-elect Donald Trump as their factory braces for the Year of the Rooster in Jiaxing, Zhejiang province, China January 12, 2017. (Photo: GT/Yang Hui)
The Chinese are not thrilled about their entanglement with the U.S. economy, any more than Donald Trump is, but like a quarreling couple, the two nations have kept dancing together out of mutual self-interest, a U.S. expert has said.
Farok Contractor, a distinguished professor at Rutgers Business School, made the remarks in an article posted on his website Saturday.
According to professor Contractor's research, adding up the numbers for exports as well as foreign direct investment (FDI) between China and the U.S., the maximum number of jobs created by such activities in China is between 17.79 and 17.99 million, while the number in the U.S. is about 1.6 million.
Besides jobs, other consequences of the two nations' intertwined economy are also too important to be neglected.
Many Americans blame the United States' massive trade deficit on China. However, what will happen to the U.S. consumers if the country replaces Chinese imports with U.S. manufacturing?
Based on the two countries' relative economic data of 2016, Contractor calculated that U.S. consumers would pay an additional cost of 295.17 billion U.S. dollars, or 2,380 dollars per household, on consumption in 2016.
Furthermore, the above estimate is only for consumer products and does not include U.S. imports of industrial output from China.
Policy shifts also have unforeseen consequences and knock-on effects, such as inflation-which has been quiescent for the past decade, but could be reignited by an additional burden of 295 billion dollars.
The Chinese government plowed most of their surpluses back into U.S. government Treasury bonds and securities, totaling 1.2-1.8 trillion dollars.
"It may not matter much, therefore-at least on a year-to-year basis-if the trade deficits suffered by the U.S. against China, or the rest of the world, are compensated by foreigners plowing their trade surplus money back into U.S. investments," said Contractor.
Trump alleges that the loss of U.S. jobs is "the greatest theft in the history of the world." This assertion is misleading and true only in very small part.
For every one U.S. job lost through international trade (1980-2016), informed analysts, such as the Wharton School, conclude that three or four jobs have been lost because of automation, robotics, information technology, and other productivity boosters.
If China did not exist on the planet, other low-wage nations, such as Vietnam, India, or Bangladesh, would fill its place. Hundreds of millions are willing to work for less than one dollar per hour.
