Economic Snapshot | Budget, Taxes, and Public Investment

Surging China imports devastate U.S. industries

Snapshot for November 20, 2002.

Surging China imports devastate U.S. industries

Trade deficits usually shrink during an economic downturn, but China’s unfair trade practices have caused the U.S.-China deficit to soar despite the U.S. recession of the past two years. Between 1989 and 2001, though U.S. exports to China more than tripled, imports from China increased eightfold, causing a whopping twelvefold surge in the U.S-China trade deficit. So far this year (through September, the latest month for which data are available), the deficit has continued to grow and is projected to reach $100 billion, an all-time record.

U.S.-China trade balance

The U.S.-China trade relationship is of growing importance to overall U.S. trade. Exports to China grew from 1.6 percent of total exports in 1989 to 2.6 percent in 2001. Imports from China now comprise 9 percent of all U.S. imports, up from 2.5 percent in 1989. China alone now accounts for more than one-fifth of the total U.S. trade deficit.

Contrary to promises by business and government leaders that increased trade would benefit workers on both sides of the Pacific, the opposite is actually occurring. China’s export industries are associated with gross violations of human rights, including forced labor,1 and even while China’s economy is growing and becoming more productive, minimum wages are stagnant or decreasing in major manufacturing centers.2 Meanwhile, in the U.S., growing trade deficits are resulting in closed factories and lost jobs in every industry and state. Between 1992 and 1999, growing U.S. trade deficits with China eliminated more than 683,000 jobs in the U.S. economy; EPI economists forecast the loss of an additional 872,000 U.S. jobs due to surging trade deficits with China by 2010.3

1. See U.S. Department of State. 2001. 2000 Country Reports on Human Rights Practices. Washington, DC: U.S. Department of State.
2. Legget, K. and P. Wonacott. 2002. “Burying the Competition.” Far Eastern Economic Review. October 17.
3. Scott, Robert. 2000. “China and the States.” EPI Briefing Paper. Washington, DC: Economic Policy Institute.

This week’s Snapshot by Adam S. Hersh and EPI Research Co-Director Robert E. Scott.

Check out the archive for past Economic Snapshots.