That's right. 2.4 million jobs lost in 8 years can be directed attributed to China.
Since China joined the World Trade Organization (WTO) in 2001, 2.4 million jobs have been lost or displaced in the United States as a result of the burgeoning trade deficit with that nation
Dr. Robert Scott, International Economist for the Economic Policy Institute, has a new paper, Unfair China Trade Costs Local Jobs and it's well researched, damning. The AAM has published the report in an easy scrolling presentation on the AAM website.
The research paper's bullet points are reprinted below:
- The 2.4 million jobs lost/workers displaced nationwide since 2001 are distributed among all 50 states, the District of Columbia, and Puerto Rico, with the biggest losers, in numeric terms: California (370,000 jobs), Texas (193,700), New York (140,500), Illinois (105,500), Florida (101,600), Pennsylvania (95,700), North Carolina (95,100), Ohio (91,800), Georgia (78,100), and Massachusetts (72,800).
- The hardest-hit states, as a share of total state employment, are New Hampshire (16,300, 2.35%), North Carolina (95,100, 2.30%), Massachusetts (72,800, 2.25%), California (370,000, 2.23%), Oregon (38,600, 2.19%), Minnesota (58,800, 2.17%), Rhode Island (10,600, 2.01%), Alabama (39,300, 1.97%), Idaho (13,500, 1.97%), and South Carolina (38,400, 1.97%).
- Rapidly growing imports of computer and electronic parts (including computers, parts, semiconductors, and audio-video equipment) accounted for more than 40% of the $186 billion increase in the U.S. trade deficit with China between 2001 and 2008. The $73 billion deficit in advanced technology products with China in 2008 was responsible for 27% of the total U.S.-China trade deficit. The growth of this deficit contributed to the elimination of 627,700 U.S. jobs in computer and electronic products in this period. Other hard-hit industrial sectors include apparel and accessories (150,200 jobs), miscellaneous manufactured goods (136,900), and fabricated metal products (108,700); several service sectors were also hard hit by indirect job losses, including administrative support services (153,300) and professional, scientific, and technical services (139,000).
- The hardest-hit Congressional districts had large numbers of workers displaced by manufacturing trade, especially in computer and electronic parts, apparel, and durable goods manufacturing. The three hardest hit Congressional districts were all located in Silicon Valley in California, including the 15th (Santa Clara county, 26,900 jobs, 8.3% of all jobs in the district), the 14th (Palo Alto and nearby cities, 20,300 jobs, 6.3%), and the 16th (San Jose and other parts of Santa Clara county, 18,200 jobs, 6.0%).
- The hardest hit Congressional districts were concentrated in states that were heavily exposed to growing China trade deficits in computer and electronic products and other industries such as furniture, textiles, and apparel. Of the top 20 hardest hit districts (see Table 5, below), eight were in California (in rank order, the 15th, 14th, 16th, 13th, 31st, 34th, 50th, and 47th), four were in North Carolina (10th, 6th, 4th and 5th), three were in Texas (31st, 10th and 3rd), two were in Massachusetts (5th and 3rd), and one each in Oregon (1st), Georgia (9th), and Alabama (5th). Each of these districts lost more than 8,600 jobs (2.8% of total jobs in the district).
What is astounding in this report are the areas with the number one job losses from trade with China, the heart of those jobs of tomorrow we heard touted by politicians, is Silicon valley. Get that? It's not just India stealing the U.S. tech sector, it's China.
Growing trade deficits cost jobs in every state and congressional district (CD), the report found, including the District of Columbia and Puerto Rico. The computer, electronic equipment and parts industries experienced the largest growth in trade deficits with China, resulting in 628,000 job losses—26 percent of all jobs displaced by trade between 2001 and 2008.
26% of all trade job losses are high tech/high tech manufacturing jobs! While global trade did collapse this recession, note the China PNTR (trade treaty) wasn't even signed until 2000, kicked in about 2002 and this study does not even cover this recession data.
The Alliance for American Manufacturing has created a data map, where you can drill down into China trade loss data by Congressional district.
Click on Map to Go to Website and Interactive Map
A bi-partisan coalition of Senators, spearheaded by Chuck Schumer and Lindsey Graham, have introduced a new bill, S.3134: The Currency Exchange Rate Oversight Reform Act of 2010. The bill is to legislatively get some real action on the grossly undervalued Chinese currency, which gives China an unfair trade advantage.
Legislation is critical for as one can see, the United States is hemorrhaging jobs and for any other body to act, well, it might be too late for the U.S. worker.
Scott, in his study, reports currency misalignment (a better political term to avoid motivations as to why the RMB is so undervalued), is a major reason we have lost 2.4 million jobs:
A major cause of the rapidly growing U.S. trade deficit with China is currency manipulation. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar. While the value of its currency should have increased as China exported more and more goods, it has instead remained artificially low, and China has aggressively acquired dollars to further depress the value of its own currency. China has tightly pegged its currency to the U.S. dollar at a rate that encourages a large bilateral surplus with the United States. China had to purchase $453 billion in U.S. treasury bills and other securities between December 2008 and December 2009, alone, to maintain this peg.1 China has acquired a total of $2.4 trillion in foreign exchange reserves as of December 2009 (Chinability 2010). About 70% of these reserves are held in U.S. dollars. This intervention makes the yuan artificially cheap relative to the dollar, effectively subsidizing Chinese exports. The best estimates place this effective subsidy at roughly 40% of the U.S. dollar, even after recent appreciation in the yuan (Cline and Williamson 2010).2 Currency intervention also artificially raises the cost of U.S. exports to China by a similar amount, making U.S. goods less competitive in that country.
It appears finally confronting China on it's grossly undervalued pegged currency actually has a chance of passing in Congress. If one notices on the co-sponsor list, one sees this action item is endorsed by all flavors of the political spectrum.
The Manufacture This blog is putting up all sorts of goodies related to this report and bill. I'll embed an CNBC interview with AAM Executive Directory Scott Paul (sorry it's CNBC, but hey).
Comments
Not China, US corporations
The loss of jobs is not due to China, but to the deliberate policy of US corporation to move their operations offshore...
Yes China
and why did U.S. MNCs move operations offshore, especially to China? A currency peg which made start up capital super cheap (the price to build a plant, set up infrastructure, etc.), cheap labor, the ability to manipulate currency exchanges by MNCs plus park profits offshore....
and the biggest reasons...China demanded partnership with many of these companies and these idiots believed in the 1.3 billion consumer market of China. The mythical consumer market and the strong desire to be a player in it did cause many a U.S. corporation to trade U.S. jobs to do it. So, they sold away the farm, signed onto China's demands in order to gain access to the mythical 1.3 billion consumer market as well as for their own global arbitrage (labor arbitrage) agendas.
So, I'll agree with you on MNCs and I believe they along with their financial "free flow of capital" financial sector partners helped push for these bad trade deals...
the reality is China has a host of policies to basically capture entire occupational and business sectors of the U.S. economy....therefore...
while I believe currency manipulation is just one policy change out of many that needs to happen...
well, it seems on this one we have a bi-partisan bandwagon jumping on in Congress. In addition it seems we have a host of other nations none too thrilled about losing their jobs to China and currency manipulation either...
all of which spells....we might, if we push hard enough, might have a prayer's chance of getting a bill passed on this issue...
2.4 million jobs lost to China
You are absolutely correct. Those jobs were in US soil before they started going to China, Mexico, Viet Nam, India, etc It is US companies that do that. The government is trying to revamop the economy and reduce unemployement, but there is no way that is going to happen unless those jobs come back home...and they won't.
This is as much a national security issue as any other, and I believe the federal government should stop this bleeding as soon as possible.
They have an action item
They are really trying to pass this bill.
I'll be writing more up about consequences, projected gains for U.S. and so on in a later post (this one I've literally just highlighted their work)
but for now, if you want to see China's trade manipulation confronted you can easily fire off some emails to your reps via this link.
Exchange rate and standard of living
While the EPI/AAM report provides very important data for rational economic policy making, it suffers, it seems to me, from a lack of analysis of the ‘Cost of Goods Sold’ and ‘Sales Price’ variables.
As I understand it, low cost China Labor and Capital keep American sales prices lower and units sold higher, than if the same products were manufactured in the US. If this is the case, then shoes for example manufactured in China cost less than if they were manufactured in the US and the number of shoes sold higher. If exchange rate changes what will happen to the sales price of shoes and in turn the quantity of shoes sold?
It would be interesting to see a probability correlation model, on a state-by-state basis, for the effects on both family income and expenses (75th percentile income families) per percent variation in China US exchange rate. Such a model would show the probable effects on family income and expense for every percent change in exchange rate.
It seems to me some such modeling of effects on family income and expenses would be a more informed decision making model. It seems to me that for 75 percentile income families, we have to be careful what we wish for. This China thing is a two edged sword and much of the excellent analysis like the EPI’s is only looking at one edge of the sword. If we bring home a shoe factory etc. and cost of shoes etc. results in ON AVERAGE decrease standard of family living…well…?
100 Dollars for Shoes
I still pay almost 100 dollars for my childrens sneakers now. Are you saying that if we bring that shoe factory back I'll be paying more? I think the American consumer has not benefitted from the massive outsourcing of jobs to China or anywhere else. I think the corporations and shareholders are pocketing the profits and not passing on the savings to the consumer.
If there is a case to back-up your claim please post it for I cannot find it.
$100 dollar shoes
Well, the first thing to notice is you're paying $100 bucks for slave labor made shoes, so obviously the savings did not pass onto the consumer. I don't know about you, but I sure noticed a huge downgrade in quality on clothing, even high end clothing yet the prices remain the same in the mid to high range retailers.
So, maybe someone but I will try to dig around to see if that claim of offshore outsourcing our jobs, manufacturing base and services really did result in "low prices" as is commonly claimed is even true. I must say it's true in computers though, but that's also due to huge improvements in manufacturing technology.
Secondly, there are some industries that probably are not coming back because they are just so labor intensive and textiles is commonly cited as one of them. Corporations have the globe to hunt for cheap labor, not just China.
But another point and this is a problem across the U.S. right now, is Americans need more money in their pocket. Then, buying $100 shoes isn't 10% of your paycheck, it's 2% and that makes things much more affordable. The big reason or one of them for wage repression is inflation, but somehow the have nots need more haves, that's the bottom line here, especially in a consumer driven economy.
The Reserve Army
Since the mid 1980's I have felt the assertion that labor costs are a main inflation booster is specious. The manipulation of our markets is the main inflation booster. Enron electricity, and gas prices in 2007-2008 were manipulated. Supply, Demand and Costs were not the driving factors. Labor costs in worldwide industries vary from $1 per day to hundreds of dollars per hour. Morgan Stanley has owned inventories of oil for sometime now and they manipulate the markets when politically tenable.
Last year the Saudi Oil Minister stated on 60 minutes that it costs them less then $2 a barrel to get the oil from the ground and shipped. He further stated that his country needs the price of oil to be sustained at $72 per barrel in order to support all of the projects they have going on in Saudi Arabia. Well gee, the price of oil has been in the range of 72 - 80 dollars for quite sometime now. I'm sure Morgan Stanley is getting ready to make a move. What ever happened to that oil shortage under Bush? Did Obama find some?
The bottom line is labor costs no longer play a role pushing inflation up. Just as the commodities markets are manipulated, the labor markets have been as well. Maybe we can securitize everyone's paychecks and short that market to put the final nail in labors wallets!
The only thing China is buying are commodities and raw materials to manufacture goods. The US trade deficit with China only benefits the US Corporations manufacturing their products in China. The Chinese consumers are protected by law and also by psychology to the motherland. If only Americans had similar sentiments.
Absolutely right!
Oh yeah...there's been an endless amount stating this as correct (that offshoring hasn't actually resulted in overall lower costs).
That's where that colossal jump in the CEO's -- and senior management's -- salaries and perks jumped up to over 200 percent greater than the workers over the past several decades -- the savings realized by slave labor and cheap labor (presently referred to as labor arbitrage) went solely to the profits of management and corporate owners.
Classically referred to as the "Nike formula."
The cost savings are seldom passed on to the citizenry (presently referred to as consumers).
For every job offshored, so goes a piece of the American GDP.
China shoes
John,
I buy shoes at Wal Mart and I don't recall seeing sneakers for $100 (mine certainly don’t) and I think they are made in China. However, more generally, I use shoes more as a metaphor for China products in general. It's my understanding that they (generally – on average) come to us for much less than if they were made in the US.
But, again, we can trade anecdotes to no end to support our subjective theories. But, what I'm saying is to make rational decisions we need systemic analysis of the effects of trade policy on the 75 percentile family income group. It is highly probable that China will react to actions that will negatively affect its economy. Rational decision making entails trying to anticipate those reactions and the consequences.
We are entering the political campaign season. All the politicians have to run in the second year of near 10% unemployment. They don’t want to be blamed for this mess so both parties are looking for scapegoats. Neither party can blame the other because they are both responsible so they are looking for a scapegoat. I think that’s why the China thing is getting so much press.
Again, I’m not saying that there is no problem with China. But, I’m looking for more systemic analysis (vs. anecdotes) and policy proposals in terms of affects on the working class.
Great dialogue on important subject – thanks EP
Tariffs, Tariffs, Traiffs
I have said this on numerous occasions usually with little to no response here but the US cannot compete with labor costs of only a few hundred dollars a month without big tariffs in place.
We could easily peg the tariffs to an adjustable value on Chinese currency in a way doing what the Chinese refuse to do but what happens when they start selling US dollars off after that and stop buying Tresuries? They have $2.4 trillion in Tresuries now right up there with what Social Security holds.
Then there is the question (especially politically sensitive) of how many jobs have gone south to Mexico since Nafta. I guess no one wants to talk about that one. Ford makes several car models in Mexico and the labor/benefits package costs them $10 an hour in total. $35 an hour less than costs in Alabama, North Carolina etc. So when do these companies stop doing the politically correct thing and start doing whats best for their bottom line? Well certainly when the tax package they received for moving there runs dry they will close up and off to Mexico.
What will China do if we tariff?
Jim D,
Good point, I agree. I think that there are many variables not discussed in this whole China issue. As I indicated in my comment above, I have not seen any discussion about cost of living effects of changes in China’s exchange rate. Further, there are a host of variables that are being ignored. Another, as you note, if jobs leave China that does not necessarily mean they will come to the US. They can go to other countries such as Mexico.
More generally, there seems to be little if any speculation about what China’s response will be to a tariff and how those possible responses will affect the American working class. If for example, we enact a China tariff, does anyone really believe the Chinese will just say “Oh Darn” and let it go at that! It seems highly probable that they will take some action to defend against negative effects on their economy. What will the consequences of those acts be for the American worker?
Also, the exchange rate is not having a negative effect on American corporations. As Bonddad reports today they are “flush with cash”. Maybe, we should worry less about the dollar an hour workers in China and more about the mega-rich corporate moguls in the US.
I’m not saying or implying that the China trade issues are not important. I’m saying that there is little empirical probability theory being applied to China reactions to our actions and the consequences of those actions on the American worker. Again, maybe we should be careful what we wish for – just a thought.
consequences, counter actions
I'm working on accurate data, actions as I think of them to write up in another post.
But note, Tariffs are only coming up in response to China's currency manipulation, not as a routine trade tool. The reason they are coming up is because over 80% of the non-oil trade deficit is with China and we have so much evidence this is killing the U.S. manufacturing sector, economy, jobs. More soon! (and yes I am bothering economists too on digging out some real answers).
Something to keep in mind
Remember, that for the Chinese leadership, that this isn't an economic matter, it's a political one. For the last 20 years, they've been able to claim the right to rule based upon economic development. 8% GDP growth is the magic number. Anything below that falls beneath what the Chinese people have come to expect in return for low wages and poor treatment. If the growth stops, the Chinese leadership will face real problems with social unrest.
They've kept things under wraps with their gigantic stimulus last year, but the problem is that they are producing products that have no markets. Last month, for the first time in 6 years, China had a month in which there was a trade deficit. This was because companies had ramped up to ship things out ahead of the Easter holiday.
The question is whether things will return to normal this month. It's possible that they won't. Ironically enough, there's a labor "shortage" in China, and we here the same rhetoric that this is because there are jobs that Chinese workers won't take. (Unspoken is the wage and working conditions.) So now, factories are moving on to Vietnam.
Right now, a number of former factory workers have simply left the industrial labor force, and have returned home to the country. Unless the government finds a way to keep these people afloat, they have a serious problem. Remember too that although Chinese made goods have a good profit margin on the shelf in the US, that the factories making them in China rarely control distribution.
So let's say that you buy a pair of sneakers in the US for $40. If you look back at who gets what, the big winners are the importing companies.
So it may be that the materials costs, labor, and overhead for making the shoes only comes out to $4.50 a pair, but the factory owner isn't getting the bulk of that difference. That factory owner will sell the shoes for maybe $5 to an importing company. Their margin is not that great, $0.50. So let's say transportation to the US adds another $1.00. So we're at $6. Now that importer will turn around and sell those shoes to a retailer for $15. After storage costs and the like, they make maybe $5. Now the retailer puts the shoes on the shelf for $40, and they may put out $10 in overhead and the like. So at the normal price they take home $15 from the sale, the lion's share. Now, they often have to get stock moved out on sale, so that's an overestimate, but still.
This is the reason that Chinese companies want to control distribution, but back to my original point. In the short term, because the Chinese don't control distribution, factory owners margins are low. Which means that their advantage isn't the use of labor saving technology, it's the substitution of cheap labor for capital investment. That isn't going to change in the short term.
The problem for the Chinese government is that thing margins mean and waning demand mean that the whole show can collapse overnight, leaving a mass of very angry, unemployed workers to deal with. Get enough angry workers, and you have a revolutionary situation. Hence, the Chinese government isn't going to do anything, like allowing the yuan to appreciate, that could affect these factory's thin margins.
The key here is capital investment, and how Chinese manufacturing moves from substituting cheap labor for capital investment towards replacing cheap labor with capital investment.
manfrommiddletown
I'm working on some more posts on this topic. Is your email address, in your profile on EP up to date? I was going to email you about some of this and wondering where you've been. Yeah, one thing to note is what a population of 1.3 billion brings a nation to spin up, which is a major factor which doesn't exist in some quarters! ;)
I caught the labor shortage and a host of things I know you will be interested in but the biggest thing is there is pressure on the U.S. Treasury to call a spade a spade here and label China as a currency manipulation. That implies some real government action if that happens....but ya know, Geithner....so the politics are going on not just in China.
China is the least of our worries
This is the type of ‘shoe’ analysis that I think we need if we are going to make rational decisions about China or any other trade partner. This ‘shoe’ thing is of course anecdotal, but I think it could be a model for more general analysis if some sort of manufacturing index were developed to encompass a large number of China manufactured goods in various categories and submitted to similar analysis.
On another of your good points, I’m not sure that China will have a problem moving from cheap labor to capital-intensive industries. First, I think they have the capital. In recent decades that have poured capital into massive infrastructure projects such as the “Mile High’ railroad to Tibet, the Three Rivers dams, high speed trains, the phenomenal commercial construction of Shanghai, pipelines and refineries on the Siberian border, one could go on. It seems possible that they could now begin to move capital away from infrastructure construction to manufacturing (just my subjective thinking based on news articles over the years).
Also, it is my understanding that the education system of the China is significantly more efficient than ours. Bonddad has recent noted that much of our un- and under- employment is concentrated in high school and below education levels.
In sum, there is a large body of anecdotal evidence suggesting that China has the capital and educated population to move fairly quickly to high technology manufacturing. Keep in mind it’s only been 38 years since Nixon went to China. To me the comparison between China’s economic development and ours in those years is stunning.
That’s why I think the whole exchange rate / tariff thing is largely meaningless. It’s like putting a bandage on arterial bleeding. We have major (historic proportion) economic problems and the least of them is China with a GDP a small fraction of ours – just a thought.
On $100 shoes
Pricey shoes have been around for quite a while. My son used to "have to have them" because they were "cool." But I obseved that these $100 sneakers are sold for $25 at outlet stores. Same shoe, same slave labor input, different price. Let's all learn to spend less -- it is not a big adjustment. The idea is to make offshoring less profitable at every opportunity.
Frank T.
Frank T.
Today, A Sad Loss
Sad to learn today that Paul Craig Roberts is bringing an end to his writing career. An authentic peoples' voice for many years, Roberts will be missed. Here's a link to his last article at Counterpunch, its pertinence to this blog topic unmistakable:
http://www.counterpunch.org/roberts03242010.html
wow
Why would he stop writing? Although it's true the minute you go against some political orthodoxy you are censored..
which is yet another reason to stick to facts on this site.
A conservative is banned because they are against the wars, a conservative is banned because they are not anti-choice, a liberal is banned because they are not for more immigration, a liberal is banned because they speak of deficits and spending....the list goes on and on.
Roberts is a conservative but one who can see the numbers due to his economic background, so that's really uncool and he should not shut up! Why doesn't he start a blog, run ads and write about whatever he feels like? A lot of people agree with him.
He'll Be Missed
I've been a fan of his for some time. He's been a passionate critic of the ruling class's off-shoring, war, torture, and injuries to privacy. And he was absolute anathema to its noxious neo-liberal/neo-con pulse. His commentary was trenchant and truthful. I'll miss him.
Yes, but
Originally, I didn't care for Mr. Roberts (he was one of those supply-side econs with the Reagan Administration, after all), but the last decade I truly appreciated what he had to say, and found myself in almost complete agreement with him.
That quote from his counterpunch missive is that disagreement --- he mistakes scams taking advantage of global warming, and doesn't understand the overwhelming scientific data portending what's to come -- and greatly accelerating in time frame.
Nope, I appreciate Mr. Roberts on the economy, but he should stay away from science.
Cap-and-trade a scam, global warming a reality.
Good thing we didn't need those jobs
We don't need to manufacture. We don't need high tech. We can run our economy based on flipping houses and selling the rest of the world debt instruments priced in dollars.
Midtowng has it down
Once again, midtowng, you've completely figured it out! And major props to you, guy.
According to this article,
As long as Corporate America, or Multinational America, doesn't experience a "debt shortage" -- we are truly good to go....
Geez.....
“Lies, Damn Lies and Statistics” – China trade
“Lies, Damn Lies and Statistics” – China trade
John Frisbe writing for “the US-China Business Council” criticizes the above “Flawed [EPI] Study China Jobs…” Michael Pettis in his “China Financial Markets” blog criticizes the Frisbe report.
And, the beat goes on…
Yes, we have a China trade blogger war going on
No surprise there. Now I believe the reason we have this war is....no one knows (and I've tried to find this out), how much U.S. multinational corporations as well as various banks (read JP Morgan Chase, Citigoup, Goldman Sachs) are dependent upon a devalued Chinese currency. These are the various businesses that offshore outsource production to China for cheap labor as well as deals (and this is U.S. job loss) as well as various financial "investments" and so on that require a undervalued Chinese currency.
Thanks, I will scan them, I've got some data and digging around on China to write up some posts.
I've also got a book review on someone who is a self proclaimed Protectionist. (ah, such a dirty word, not!)
I can say for sure I don't think a "sudden lurch" on a RMB revaluation is good, it has to be incremental and time for all of the above to react.
More later, but thanks for the heads up on who to go scan in the Chinese economics blog/press war.
saw Max Keiser, said corporations want China currency
said corporations want China currency changed. I don't believe it.
Exchange Rates: “Nothing new under the sun”
D. H. Fischer in his book “The Great Wave: Price Revolutions and the Rhythm of History” writes:
"Exchange rate became highly unstable in the fourteenth century. Governments tried to stabilize their fragile economies by imposing export controls. The effect was often the opposite of what was intended. England’s Edward I, for example tried to make things better by forbidding the export of English coins in 1299. By 1307, he had prohibited the removal of foreign money as well. He also pegged gold at an artificially high level relative to silver. These policies caused increasing distortions in exchange rates, which in turn created dislocation in English trade.”
And the beat goes on…
yuan undervaluation not the primary cause
The report is great, but the underlying cause is not the undervaluation of the RMB.
Case in point: Germany
Germany despite being a 1st world nation as well as having the euro (quite strong in the past decade since its inception) nonetheless was the largest export economy until last year.
A glance at Germany's formula shows many differences, but they can be distilled down to 2 items:
1) A much more sensible division of profits and responsibilities between government, labor, and management
2) A lack of FIRE based interests driving up housing
Both items are important, because national health care for example is a government enterprise by which both labor and management benefit and pay for.
But in turn international competitiveness is still dependent on relative costs. Housing prices in Germany were flat for most of the global housing bubble - partly due to an earlier spike from a housing tax subsidy which expired in 1998.
"primary" as cause
Germany runs a trade deficit with China. The U.S. non=oil trade deficit is >80% China. So, while Germany does have better labor support and rights, China isn't a problem for just the United States, which is why it is seen other nations will join the U.S. in demanding China float the RMB.
I'll write more about this but when one has a currency exchange ~40% below it's real value, it has an amazing advantage on trade.
I believe the RMB manipulation isn't the only thing but it was much to my own surprise the magnitude (which I'll write up soon) Chinese currency manipulation had on the U.S. trade deficit with China. It's a good chunk of U.S. GDP!
Should concentrate on Growth
Such trade agreement can very well ruin the growth of the state. The government of the state should consider it wise before entering any such agreement. Even the state should try to open some other way to create employment instead of only thinking about the loss.