"To me," White House adviser Steve Bannon told the American Prospect, "the economic war with China is everything. And we have to be maniacally focused on that. If we continue to lose it, we're five years away, I think, ten years at the most, of hitting an inflection point from which we'll never be able to recover."
"Economic war" is not a frame most Republicans use to describe our relationship with China. In 2000, the U.S. Congress voted to admit China into the World Trade Organization, thus lowering trade barriers, opening the U.S. up to Chinese imports. Americans have access to Chinese-made goods, which makes life cheaper, and Chinese people have many more jobs, creating a massive middle class in the world's second-most populous nation.
But from some perspectives, this can look like war by China on U.S. manufacturing: Chinese imports have helped destroy manufacturing jobs in the U.S., and there have been cultural aftershocks of that — probably including the election of Donald Trump. MIT economist David Autor, along with coauthors, has published a string of studies examining the impact of Chinese imports on the U.S.
Here's what Autor found in 2012 about Chinese imports into the U.S. in the 7 years after WTO accession:
- "In 2000, the low income-country share of US imports reached 15 percent and climbed to 28 percent by 2007, with China accounting for 89 percent of this growth."
- "The share of total US spending on Chinese goods rose from 0.6 percent in 1991 to 4.6 percent in 2007."
- "Over the same period, the fraction of US working-age population employed in manufacturing fell by a third, from 12.6 percent to 8.4 percent."
Here's what he found about how this certain areas in the U.S.:
- Places exposed to Chinese imports (basically, making things that the U.S. also imports from China) experienced increases in manufacturing unemployment, as well as small increases in non-manufacturing unemployment.
- This impact was stronger among those without college degrees.
- "rising import exposure spurs a substantial increase in government transfer payments to citizens in the form of increased disability, medical, income assistance, and unemployment benefit payments"
Other studies by Autor have found:
- Imports from China have reduced the number of patents by American companies.
- Exposure to Chinese imports drives down marriage.
So while there are broad gains to the whole U.S. economy from trade with China, there are serious and deep costs to many parts of the country, the Autor studies suggest.
Timothy P. Carney, the Washington Examiner's commentary editor, can be contacted at email@example.com. His column appears Tuesday nights on washingtonexaminer.com.