Trade vs. Technology

This is one more in the series of unsubstantiated articles that attempts to whitewash China’s role in the decline of manufacturing employment in the West, particularly in the United States.

It is one thing to argue that protectionism would hurt China and the U.S because of the geopolitical implications of Chinese reactions, etc.

But, it is another thing to argue, without evidence, that technology and not trade took away U.S. jobs. That is bollocks 🙂

We have research by Schott and Pierce, by David Autor and by two other researchers in the case of UK showing that trade with China has had a big role to play.  Not to mention Brad Setser’s article on China in WTO 15 years on. All of them had been blogged in this site before.

The concerted attempt to downplay that effect is another one of those elite cover-ups, perhaps, just as is the case with Islamic fundamentalism and terrorism.

China was not one of those standard small, open economies (SOE) where enhanced trade co-operation results in a win-win for both the SOE and the larger trading partner. China is an outlier with its size and with financial and other forms of repression, it was clearly a special case. China’s WTO entry was a big disruptive event for world trade and for developed
world manufacturing.

One must also read the Chairman’s statement of M&T Bank, 2016.  Released last month. Blogged here.

Indeed, the failure of informal employment in developing world to decline along with economic growth is due to the erosion of competitiveness vs. China both in terms of direct import competition with Chinese-made goods and in third-country markets.

Kevin P. Gallagher is sold. Sample this conclusion from his article in FT:

The Trump administration’s proposed cuts to global economic institutions appear to be yet another sign of a US retreat into isolationism. Rather than withdrawing, Washington should be leading the way to embrace China’s efforts and figure out ways to co-ordinate with, and complement, China’s new global economic prowess. [Link]


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