fresh voices from the front lines of change







In a New York Times Economix blog post, David Barboza suggests that things are looking better in U.S.-China trade because America’s exports to the People’s Republic are increasing.

Barboza cites a U.S.-China Business Council study that shows American exports to China soaring 32% last year, to a record $91.9 billion.  The Council says China is now the world’s fastest-growing destination for American exports and that American exports to China have jumped 468% over the past decade.

Sounds good, right?

Actually, there’s a bit of a hidden problem.  As Alliance for American Manufacturing (AAM) Executive Director Scott Paul commented, the export data to China is misleading not only because of price inflation but also because it doesn’t reveal what those exports really are:

Some of our fastest growing exports to China are scrap metal, scrap paper, and raw unprocessed commodities. Moreover, very few other goods we export to China are finished goods that end up in the hands of Chinese consumers. We are exporting capital goods to build factories (that will compete against us), as well as components that will be assembled into finished products and shipped back to the U.S. Barboza also fails to point out that our trade deficit with China continues to grow. It was a record last year.

What this really means is that:

1. U.S. exports to China very much resemble those of a third world country: scrap and recycled materials along with agricultural products.

2. These exports do not support job growth in the U.S.  Ie. farm employment in not booming, and the U.S. is not hiring workers to make scrap material and recycled paper.

3. The U.S. trade deficit with China reached a record in 2010 of $273 billion.  Exports may be increasing, but imports are climbing at a much greater rate–which represents a continuing drain on U.S. jobs.

Barboza essentially acknowledges all of this, saying, “much of what China imports is used to make goods that are then re-exported, like the Apple iPhone.” 

And, in addition to these turnarounds, Barboza also acknowledges that “exports of crops to China jumped to $13.8 billion last year,” and that “China is hungry for other resources as well, like recyclable metals and paper.”  He cites New York state’s biggest export to China in 2010: “waste and scrap.”

This is not how to make trade work for the U.S. 

The U.S. competes head-to-head with China in autos and auto parts, energy-intensive industries (steel, glass, paper, etc.), clean energy goods, high tech goods (like semi-conductors), machine tools– the list goes on.  Those are the sectors of value-added products that need to be exported.  They support good-paying jobs, they drive innovation, they balance the trade ledger. 

What’s needed is a strong industrial policy to ensure these industries succeed and can actually continue to export.

Read more about the importance of a national manufacturing strategy.

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