Spring 2006 Issue - Special Report
Manufacturing 2006
World Trends and the China Card
Posted: October 15, 2008
The U.S. is not the only major economic power that’s losing manufacturing jobs. Job losses in other countries were highlighted in a study released in 2003 by the consulting firm, Alliance Bernstein.
The company looked at manufacturing in the 20 countries with the largest economies in the world. It found these nations lost 22 million manufacturing jobs between 1995 and 2002. The U.S. was one of 10 nations that lost jobs. Others with significant losses included Japan, South Korea, Russia, Germany, Sweden and Brazil.
But no country lost more manufacturing jobs during the study period than China. China lost 15 million manufacturing jobs, suffering a higher loss rate – 17 percent – than the 12 percent loss for the US. The survey period coincided with a time when many China’s manufacturers that had been owned by the government were privatized, resulting in layoffs for millions of workers.
The report was publicized in the Wall Street Journal newspaper and the number of China’s lost manufacturing jobs is often cited by ”free traders” in defense of the existing trade relationship with China. If even China is losing jobs, they ask, why should we be surprised by U.S. job loses?
But China is a wild card, notes Joseph Carson, the economist who wrote the 2003 report for Alliance Bernstein. China job losses stopped in 2000, the year before China was permitted to join the World Trade Organization, an event that provided the Chinese with greater access to the US and other foreign consumer markets. From 2000 to 2002, China added 2.6 million manufacturing jobs. After the report came out, Carson said, China changed its methodology for calculating and reporting job figures. “I think they want to hide how many jobs they are creating.” Carson said
Carson said his researchers believe China has added 10 million manufacturing jobs since 2000 while the U.S. lost three million after holding steady at about 17 million jobs from 1995 through 2000.
Carson argues that in the long run, manufacturing job losses are not necessarily bad, comparing it to the loss of farm employment in the early 20th century following the introduction of machines and vehicles to replace work that had been performed by people and animals. “It’s a sign of progress,” he said. “It shows we’re increasing our productivity.”
