We believe one of the main drivers of the increase in the Normal 53°Feitian...
2021-01-26 2 ENGLISH REPORTS
Lower-cost imports from China benefit US businesses and households. In 2019, the US imported $452 billion worth of goods from China, equivalent to 18% of total goods imports. Concerns have risen over the impact of imported manufactured goods from China on US manufacturing employment in sectors where those products compete. However, China has a comparative advantage in the production of low-cost manufactured goods, and reshoring this production to the US would lead to a significant increase in US consumer prices and a decrease in household real incomes. Indeed, econometric studies have found that as a result of imported goods from China, the US consumer price index was around 2% lower from 2000– 2007 than it otherwise would have been.3 This is due not only to direct imports of finished consumer products, but also intermediate goods imported from China, which lower domestic manufacturing costs.
While the impact of Chinese imports on US manufacturing jobs has also been highly visible given their geographic concentration in the US,4 overall gains to US real incomes from trade with China have outweighed these losses. Research suggests the impact of lower prices and increased employment in sectors that benefit from cheaper inputs from China outweighs the impact of reduced employment in manufacturing sectors competing with Chinese imports.5 Furthermore, research indicates that increased automation is a much larger driver of the fall in manufacturing employment than the effects of trade with China. Automation will continue to reduce the demand for low-skilled manufacturing employment over the coming years, and Oxford Economics estimates as many as 20 million additional manufacturing jobs worldwide could be displaced due to robotization by 2030.6 Trade restrictions will not help reverse this trend; in fact, as we show in Section 3 of this report, protectionism has actually hurt the US manufacturing sector.
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