How much does US-China trade hurt American workers? Slowly, a clearer picture.
A study published earlier this year suggests that imports in US-China trade have had a significant negative impact not just on factory workers but also on their communities.
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"There is nothing in our results to show that US trade with China overall is negative" in its impacts, Mr. Hanson says. For one thing, their study makes no effort to account for positive impacts on the economy from US exports to China.Skip to next paragraph
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But Mr. Hanson says the magnitude of the negative impacts, as found in their research, surprised him despite his years of studying the economics of trade.
As people are pushed out of jobs by Chinese imports, the research found a substantial increase in government transfer payments to individuals in the form of things like unemployment insurance and disability benefits.
The potential offset is that US consumers (including families affected by job losses) reap benefits from access to lower-cost goods from China.
An important conclusion of the new research, however, is that the economic losses to the US may be roughly equal in size to those gains for consumers.
The government "transfers fall far short of offsetting the large decline in average household incomes found in local labor markets that are most heavily exposed to China trade," write Hanson and his colleagues. And as the use of public benefits goes up, "our estimates imply that the losses in economic efficiency ... are, in the medium run, of the same order of magnitude as US consumer gains from trade with China."
What can US do?
This is just one study on a complex topic. But these researchers are respected in their field.
As Mr. Hanson sees it, the overall impact of trade among nations, including with China, is positive. But the new research sheds light, he says, on "just how bad conditions are for low-skilled workers in the US," who have been most affected by trade with low-wage nations.
With the US still running a large trade deficit with China, thanks to those fast-growing imports, what are the implications for the Obama administration and Congress?
Some economists say it's a signal that a tougher approach in the dialogue with China is warranted, including efforts to confront China for alleged violations of World Trade Organization agreements.
Beyond that, though, US policymakers may want to improve programs designed to help displaced workers retrain for new careers and to make sure that the next generation of workers will be well trained for jobs that can withstand competition from lower-wage nations.
Although this week's meeting's produced no major breakthroughs in US-China policy, the US Treasury said Tuesday that China agreed "to take actions that will provide greater market access" for US firms and to continue moving toward greater exchange-rate flexibility.