Report: Trade with China supports 2.6 million U.S. jobs

Chinese President Xi Jinping, right, and the president and CEO of Boeing Commercial Airplanes, Ray Conner, tour the Boeing assembly line on Sept. 23, 2015, in Everett, Wash.
Chinese President Xi Jinping, right, and the president and CEO of Boeing Commercial Airplanes, Ray Conner, tour the Boeing assembly line on Sept. 23, 2015, in Everett, Wash. AP

Trade between China and the United States supports roughly 2.6 million U.S. jobs, according to a report released Tuesday by an American business group concerned about politicians bashing Beijing as a jobs thief.

While China has undercut U.S. manufacturing jobs with cheap labor, the growth of the world’s most populous country has also created new business opportunities here, said the US-China Business Council. California and Washington state are major exporters to China, and states such as Kentucky, South Carolina and Georgia are benefiting from Chinese investment in U.S. factories.

Although the report doesn’t mention President-elect Donald Trump by name, it appears aimed at rebutting some of his statements, both during the campaign and after, labeling China as a currency manipulator and stealer of jobs.

“Presenting only the negative impact and ignoring the jobs created, lower inflation and other benefits of trade with China can lead to policies based on incomplete or misleading information,” said John Frisbie, president of the US-China Business Council, in a statement.

The council represents more than 200 companies that do business with China, including Ford, Coca-Cola, Microsoft and Dow Chemical. Such companies have long deployed groups like the US-China Business Council to lobby Beijing for market access and fairer trade practices. Now they are using that same umbrella to counter negative rhetoric from the next occupant of the White House.

On the campaign trail, Trump repeatedly threatened to slap a 35 percent tariff on Chinese goods if Beijing doesn’t change its practices. Economists have warned that could trigger a trade war with China, but Trump hasn’t de-escalated his rhetoric since winning the presidency.

Late last year, the US-China Business Council commissioned Oxford Economics, a British consulting firm, to produce a report analyzing the U.S. employment impacts of trade relations with China.

The report projected that, among the business and financial services sector, U.S. firms would increase their exports from $7.1 billion in 2015 to more than $520 billion by 2030. The United States also exports about $15 billion in agricultural commodities each year to China, home to nearly 1.4 billion people.

Increasingly, Chinese companies are building factories in the United States to support manufacture of goods sold back home. The report notes that Haier, a Chinese appliance manufacturer, employs 12,000 U.S. workers in Kentucky, Indiana, Alabama, Georgia and Tennessee, and is expanding operations in South Carolina. Wanxiang, an automotive parts manufacturer, employs more than 12,500 American workers, the report states.

As of 2015, the U.S. trade deficit with China was $365 billion, but Oxford Economics argues those numbers are misleading. Many of the products assembled in China are made with foreign-produced components, including many made in the United States.

“If the value of these imported components is subtracted from China’s exports, the U.S. trade deficit with China is reduced by half, to about 1 percent of GDP — about the same as the U.S. trade deficit with the European Union,” states the report.

Beijing has erected a number of barriers to certain foreign companies seeking to enter the Chinese market. But Chinese leaders have also been trying to reform their economy by reducing the number of state-owned enterprises and stimulating domestic spending, trends that bode well for foreign firms.

“We must address unfair trade practices by China (or any other trading partner) when they occur,” said Frisbie. “We also need to be clear about other factors that affect jobs in the United States, such as technological changes and productivity.”

Stuart Leavenworth: @sleavenworth