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Gains or Pains?-- Effects of US-China Trade on US Employment: Based on a WIOT Analysis from 1995 to 2011

Abstract

With the rise of China, US-China trade has developed rapidly since the 1990s. In 2007, China overtook Mexico as the second largest trade partner of the US. But the trade imbalance, or more specifically, the US merchandise trade deficit with China has become the focus of both countries, especially after China’s entry into WTO in 2001. In 2013, the US-China trade deficit on goods was about 23 times more than that in 1991, up from 13.95 to 330.29 billion dollars, and elevated to 61% of US total trade deficit on goods (Figure 1). A large and persistent trade imbalance raises policy concerns because of its perceived links to domestic production and employment—specifically, the fear that more imports will mean less production and fewer jobs in the United States (Bown, 2005). From 1991 to 2013, the US manufacturing employment rate (percentage of population) decreased from 10.64% to 6.05%, leading to a widespread view that job losses in the US are “made in China”.

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