China a scapegoat for US illnesses

Pang Li / China Daily

The US Senate passed the yuan bill last week on the pretext that Americans are upset over their trade deficit with China and that China is the cause of the high unemployment rate in the United States. Many US politicians consider restricting imports from China a way to solve the country's unemployment problem. It fails to realize that instead of improving employment in the United States, trade protectionism would harm American interests.

Take the bilateral trade row over exports of Chinese tires to the US for example. The United Steelworkers (USW) has blamed China-made tires for disrupting the US tire producers' market.

The data USW has highlighted show that four US tire plants closed between 2004 and 2008 and more than 5,000 tire workers lost their jobs. Another 3,000 workers were rendered jobless in 2009. The USW has alleged that the surging tire imports from China aggravates the country's unemployment problem and thus recommended tougher levies on them.

But according to the US Bureau of Labor Statistics (BLS), in recent years, the average annual job loss in the US has been more than 40 million, with 2009 and 2010 seeing the loss of 63.96 million and 64.21 million jobs (including employment to unemployment and not in labor force to unemployed). As the figures show, the import of China-made tires has had little or no effect on the US job market.

This is also true of other areas of Sino-US trade. Although the West, especially the US, has been criticizing China for causing unemployment, it can't furnish any concrete proof of the exact number of job losses caused by imports of Chinese products

In 2008, the Economic Policy Institute, a think tank, did release a report, alleging that 2.3 million jobs had been lost in the US from 2001 to 2007 because of the imbalance in Sino-American trade - with 366,000 jobs lost in 2007 alone. Judging from such reports, though their credibility remains disputable, Chinese imports were "responsible" for less than 1 percent of the job losses in the US. So, the imbalance in Sino-US trade has hardly affected the job market in the US.

For long, the West, especially the US, has taken it for granted that the trade deficit necessarily means a drain on and shortage of jobs leading to unemployment.

The fact is that even without new job vacancies, people can get employment. According to the BLS, the US created 442.95 million jobs from 2001 to 2010. Based on stereotype thinking that the number of job vacancies decides a country's employment prospects, the US should have employment opportunities for a maximum of 442.95 million jobs. But, again according to the BLS, the actual number of employment opportunities was 797.8 million.

That is because in a market economy, unemployment is an everyday issue, as is re-employment. The BLS says that total unseasonal unemployment in the US from January 1990 to May 2011 was 993.26 million and its total employment figure by October 2010 was 139.21 million. But the country's demographic data show that it had a total population of only 308.75 million by 2010.

In this sense, the accumulated unseasonal unemployment in the US from 1990 to 2010 was more than three times the size of its population in 2010 and more than seven times its national employment figure by October 2010. Were employment and unemployment status to stay un-interchangeable, all Americans should not only have lost their jobs, but also lost them three times over.

But everyone knows that it is hardly possible. Jobs are lost in a large number on a daily basis, but the jobless keep getting re-employed. This is understandable, because nowadays jobs come in a wide variety, and employees have varying levels of competence, many of whom jump from one job to another to find a place that suits them the best, though the duration of the process varies from person to person.

One should remember that the rate of unemployment and socio-economic development are not necessarily interrelated. Many Western economists believe that a rapid pace of development entails a lower unemployment rate. Therefore, they say that China should adjust its foreign trade and financial policies so that socio-economic development in the West goes smoothly and the unemployment rate drops.

But that is not true. In many cases, a country's unemployment rate could remain high despite its sound socio-economic development, which is better illustrated by the experiences of the US and many other Western countries.

China's exports to the US do not aggravate America's unemployment problem and certainly don't pull back US economic growth. It is irrational to blame China's foreign trade policy for the high unemployment rate in the US and its continuing and pervasive economic gloom.

The author is a Chinese scholar living in Australia.

(China Daily 10/20/2011 page9)