3 KEY ITEMS ON TRUMP’S HIT LIST
China runs the largest trade surplus with the United States, a sure point of contention when Trump, Xi Jinping meet this week
When President Trump meets with Chinese President Xi Jinping this week, he will remind his guest that China runs the largest trade surplus with the United States, and that persistent pattern has led to the mass exodus of American jobs in the past decade.
U. S. industries from textiles and electronics to agriculture and construction equipment have flocked to China in recent years, partnering with factories that hire low- cost workers and operate under lax environmental and labor practice standards.
The U. S. shipped $ 116 billion of goods to China in 2016, making it the third- largest export market after Canada and Mexico, according to the Department of Commerce. But that figure pales compared to the $ 463 billion in imports from China. The result is a U. S. trade deficit of $ 347 billion, the largest of any U. S. trading partner.
Here are key issues involved when the two leaders discuss their trade relationship:
JOBS, JOBS, JOBS
Trump complains that U. S. companies’ eager migration of manufacturing to cheap- labor Chinese factories — where wages average about 80% less than in the
U. S.— has cost too many American jobs.
Trade skeptics say the numbers back him up. The U. S. has lost 3.4 million jobs between 2001 and 2015 due to the trade deficit with China, and about threefourths were in manufacturing, according to Robert Scott, an economist at the liberal think tank Economic Policy Institute. Incomes of workers directly impacted fell by $ 37 billion a year between 2001 and 2011, Scott said.
Others say advances in manufacturing are mainly to blame.
A study by Ball State University found about 88% of manufacturing job losses between 2000 and 2010 were due to factories running more efficiently, including automation.
TRADE BARRIERS
China creates obstacles that make it difficult for U. S. companies to operate and sell there. Most foreigners wishing to open a business there must contract with a Chinese partner. Meat and other agricultural products are severely restricted. Cumbersome certification and labeling regulations are required for many industries.
U. S. exports to China have “a very small share of China’s overall market ... ( and) should be even bigger,” the U. S.China Business Council said in a recent report. U. S. goods accounted for 6.5% of China’s total imports in 2015, trailing the European Union and South Korea, it said. The U. S. share was down from 10% of Chinese imports in 2000.
CURRENCY
Trump accuses China of keeping its currency artificially low so Chinese manufacturers can sell products abroad at lower costs. “When you talk about currency manipulation, when you talk about devaluations, they are world champions,” Trump told the Financial Times. The Chinese government uses the U. S. dollar as a benchmark to manage its currency, the renminbi, also called the yuan.
China’s central bank controls its currency by setting a daily rate for the yuan, pegged to the dollar. The U. S. and other free- market economies let the value of their currencies rise and fall based on global demand.
The International Monetary Fund has pressured China for years to let the market determine the value of its currency rather than relying on artificial mechanisms. Five years ago, one U. S. dollar bought 6.3 yuans. Today, one dollar currently buys about 6.9 yuans, which makes Chinese imports less expensive in the U. S.