Imbalance Leads to Significant Job Losses in Manufacturing
The U.S. trade deficit in manufactures continued to rise during the first half of 2012, but at a slower pace than in 2011, while the Chinese surplus continued to soar, as noted in a new Manufacturers Alliance for Productivity and Innovation (MAPI) report.
In The U.S. Trade Deficit in Manufactures and the Chinese Surplus Continue to Rise in 2012, But at Very Different Paces (PA-112), Ernest H. Preeg, MAPI Senior Advisor for International Trade and Finance, highlights that the U.S. global trade deficit in manufactures rose by 7 percent, or by $15 billion in the first half of 2012 compared with 2011, while the Chinese surplus soared by 24 percent, or by $67 billion.
“The $169 billion three-year increase in the global U.S. deficit, from $326 billion in calendar year 2009 to a projected $495 billion in 2012, has resulted in a trade-related loss of 700,000 to 1.4 million U.S. manufacturing jobs, or almost 10 percent of total manufacturing employment,” Preeg said. “This includes an estimated 130,000-260,000 jobs in 2012.”
Manufactured goods constitute the dominant sector of trade, accounting for about 95 percent of Chinese and about 75 percent of U.S. merchandise exports. The sector is also central to technological innovation, as two-thirds of U.S. civilian research and development and new patents derive from the manufacturing sector.
The figures for the first half of 2012 offer interesting comparisons. U.S. manufactured exports increased by 9 percent, or $48 billion compared with 2011, while imports rose by 8 percent, or $62 billion.
“The faster pace of export growth, however slight, is a welcome and positive sign,” Preeg noted.
In striking contrast, Chinese manufactured exports in the first half of 2012 rose by 11 percent, or $80 billion, while imports rose by only 2 percent, or $13 billion.
There have been frequent press reports about slower growth in Chinese exports, related to the global slowdown, but little notice of the much sharper decline in Chinese manufactured imports.
“The large increase in the Chinese surplus comes at the expense of growing deficits abroad, which are especially difficult to handle at this time,” Preeg said.
The countries’ trade imbalances are connected by the extremely lopsided bilateral trade account, with U.S. manufactured imports from China more than six times larger than U.S. exports to China.
“Moreover, the entire bilateral U.S. deficit of $162 billion equates to 71 percent of the $228 billion global U.S. deficit, and to almost half of the global Chinese surplus,” Preeg said.
The Manufacturers Alliance for Productivity and Innovation (MAPI), established in 1933, is a nonprofit organization engaged in economic and policy research, continuing professional education, and allied activities. The Alliance’s corporate membership includes U.S.-based and international companies in
manufacturing and related business services.