Distinguished Professor Farok Contractor on US-China Trade

Distinguished Professor Farok Contractor on US-China Trade

THE Chinese are not thrilled about their entanglement with the US economy, any more than Donald Trump is, but like a quarreling couple, the two nations have kept dancing together out of mutual self-interest, according to a US expert.

“It may not matter much, therefore, at least on a year-to-year basis, if the trade deficits suffered by the US against China, or the rest of the world, are compensated by foreigners plowing their trade surplus money back into US investments,” said Contractor.

Trump alleges that the loss of US jobs is “the greatest theft in the history of the world.” This assertion is misleading and true only in very small part.

For every one US job lost through international trade (1980-2016), informed analysts, such as the Wharton School, conclude that three or four jobs have been lost because of automation, robotics, information technology, and other productivity boosters.

If China did not exist on the planet, other low-wage nations, such as Vietnam, India, or Bangladesh, would fill its place. Hundreds of millions are willing to work for less than one dollar per hour in those countries.

Hence, the Trumpian proposal to bring jobs “back to the US” is feasible, but economically non-viable. Hundreds, perhaps thousands, of Chinese factories facing rising wages and a shortage of skilled workers (following China’s one-child population policy) have themselves already taken the initiative to shut down operations in China and have relocated to Vietnam, Bangladesh, or other nations.


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Oemer Akyazici, CEO of Schuler China, completed Rutgers Business School’s International Executive MBA Program in Shanghai in 2008.

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