China may be losing, not stealing jobs

Labour costs in China now significantly higher than in many other emerging economies

Throughout his presidential campaign, Donald Trump has claimed that China is stealing US manufacturing jobs.

In a speech to the Republican National Convention on Thursday, Trump — the party’s nominee for the presidency — said that “disastrous trade deals” had hurt manufacturing jobs in the United States. Trump also argued that US support for China’s embrace of free trade had been a “colossal” mistake.

At one point, Trump’s argument had merit. With its large pool of workers who earned much lower wages than their US counterparts, China attracted manufacturers seeking to reduce costs, bolster profitability and keep prices low. Between 1999 and 2011, the United States lost at least 2 million jobs because of a surge in Chinese imports, according to a study published in The Journal of Labour Economics.

In today’s China, however, workers face a more troubled outlook than Trump suggests. They are losing their jobs because of a slowing domestic economy, rising costs and stiffer foreign competition — including from the United States.

Presidential candidates “are screaming about yesterday’s problems,” said Jim McGregor, chairman of the consulting firm APCO Worldwide’s Greater China operations. “Manufacturing for export is getting harder and harder” in China.

China’s labour market has changed sharply in recent years.

As its economy has expanded, creating opportunities in many sectors, assembly line jobs are not as attractive as they once were. That has caused managers to raise wages to attract workers. At the same time, local governments in Shenzhen, a coastal trading hub that abuts Hong Kong, and other industrial centres have steadily increased the mandated minimum wage to improve the welfare of working families and pressure companies to produce more expensive, high-value products.