Philadelphia Inquirer - Posted on Thu, Mar. 25, 2010

Think tank says 2.4 million U.S. jobs lost to China
By Chris Mondics
Inquirer Staff Writer

A liberal think tank based in Washington said yesterday that the United States had lost 2.4 million jobs as a consequence of its trade imbalance with China since 2001.

The author of the report called on Congress to impose tariffs of at least 25 percent on the Chinese if they fail to correct the imbalance by initiating monetary policy that would raise the price of their exported goods, making them less competitive.

The job losses were highest in California, Texas, and New York, but the Economic Policy Institute, which authored the study, said that Pennsylvania was the sixth-highest job loser, with about 96,000 jobs disappearing.

On a percentage basis, though, Pennsylvania ranked 22, with 1.64 percent of jobs lost to trade with China.

The EPI report places much of the blame for the trade imbalance on what it says are China's policies that keep its currency, the yuan, at artificially low levels. That in turn keeps the prices of its export products low.

The report asserts that U.S. factories are closing because they cannot compete on price with goods produced in China.

"We have allowed the Chinese government to game the system for too long," said the author of the report, EPI economist Robert Scott.

But Charles Calomiris, a professor at Columbia University Business School and a visiting scholar at the conservative American Enterprise Institute, disputed the EPI assessment, saying the evidence suggests that despite the imbalance, trade with China had increased U.S. competiveness and created jobs.

The most productive companies in America export goods to overseas markets that are manufactured here with parts made abroad, he said. Moreover, he said the lower cost of some goods produced overseas puts money in the pockets of American consumers.

"There is no calculation about job losses from trade in the academic literature that I have ever seen that" is reliable, Calomiris said. "It's not a zero sum game," where one side gains at the expense of another.

The EPI report said the job losses in Pennsylvania were heaviest in Southeastern Pennsylvania and in the Lehigh Valley.

Contact Inquirer staff writer Chris Mondics at 215-854-5957 or