Posted by: mulrickillion | February 25, 2012

Chinese Labor Costs and American Manufacturing

The Opinion Pages, Feb 24, 2012 —

To the Editor:

Michelle Dammon Loyalka is correct in observing that China’s labor costs are rising (“Chinese Labor, Cheap No More,” The New York Times on the Web, Op-Ed, Feb. 18). But this development will not put America “back in the manufacturing game sooner than expected” — even vis-à-vis China alone.

After all, the Chinese “industrial subsidies, trade policies, undervalued currency and lack of enforcement for intellectual property rights” she cites remain major determinants of manufacturing prowess, not simply negotiating ”sticking points.”

Indeed, they largely explain why Chinese labor costs are up by double digits lately, but American imports of Chinese products have become less than 5 percent more expensive since 2010. Predatory trade policies have also accelerated China’s transition to high-value capital manufactures, which now make up some 60 percent of American industrial imports from China. These sectors pay better than labor-intensive manufacturing, which raises overall Chinese wages. But their higher productivity typically offsets these pay levels with improved efficiency.

In 2011, these nonlabor considerations helped push the huge, manufacturing-centered United States merchandise trade deficit with China up by another 8.2 percent. The worsening of this broad measure of global competitiveness also shows how distant a meaningful American industrial comeback remains.

Research Fellow
U.S. Business and Industry Council
Washington, Feb. 22, 2012

Chinese Labor Costs and American Manufacturing –


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