23 understand the us china trade relationship 24 wang

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23 Understand the US-China Trade Relationship. 24 Wang, Zhi and Shang-Jin Wei, Xinding Yu, Kunfu Zhu. “Re-Examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective.” NBER Working Paper (October 2018): 19. 25 Jaravel, Xavier and Erick Sager. “What are the Price Effects of Trade? Evidence from the U.S. and Implications for Quantitative Trade Models.” SSRN (January 2018). 26 Autor, David, David Dorn, and Gordon Hanson “The China syndrome: Local labor market effects of import competition in the United States.” American Economic Review, 103, 6 (2013): 2121–68. 27 Ibid. 28 Feenstra. “The ‘China shock,’ Exports and U.S. employment.” 29 Dedrick, Jason, Greg Linden and Kenneth L. Kraemer. “We estimate that China only makes $8.46 from an iPhone – and that’s why Trump’s trade war is futile.” The Conversation, July 6, 2018. - trade-war-is-futile-99258. 30 Jakubik, Adam and Victor Stolzenburg. “The ‘China Shock’ revisited: Insights from value added trade flows.” WTO Staff Working Paper, (October 2018): 14. 31 Ibid. 32 Magyari, Ildiko. “Firm Reorganization, Chinese Imports, and US Manufacturing Employment.” Working Papers 17-58, Center for Economic Studies , U.S. Census Bureau. 2017. 33 FRED. “All Employees: Manufacturing.” .
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The US-China economic relationship: A comprehensive approach 9 It is also the case that the U.S.-China deficit is not a meaningful yardstick for assessing the health of the relation or its impact on U.S. employment, despite being a focus for the Trump administration. Figure 1 shows the bilateral deficit in goods and services has grown from $81 billion in 2001 to $336 billion in 2017, increasing from just over 20 percent of the U.S. trade deficit in 2011 to over 60 percent today. Figure 1. U.S. trade deficit with China Absolute and percent of total U.S. trade deficit -$50B -$100B -$150B -$200B -$250B -$300B -$350B -$400B US trade deficit with China (left axis) 2017 2015 2010 2005 2000 1995 10% 20% 30% 40% 50% 60% 70% 80% US-China trade deficit as a share of total US trade deficit (right axis) Source: Bureau of Economic Analysis Note: Pre-1999 is for goods only. The bilateral trade deficit needs to be assessed in light of the overall trade deficit which is less a product of restrictions on U.S. exports than it is a reflection of a low U.S. domestic savings rate which requires overseas capital to fund U.S. domestic investment needs and the growth in U.S. government debt. 34 Efforts to reduce the U.S.-China trade deficit without addressing the saving-investment gap, will merely change the composition of the U.S. trade deficit, leaving the overall trade deficit unchanged. 34 Feldstein, Martin. “Inconvenient Truths About the US Trade Deficit.” Project Syndicate, April 25, 2017. america-trade-deficit-inconvenient-truth-by-martin-feldstein-2017-04.
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The US-China economic relationship: A comprehensive approach 10 Seeing the U.S. trade deficit as a drain on the U.S. economy is also at odds with the facts.
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