The U.S. trade deficit with China is staggering--it hit a new record of $273bn this year--and it is costing this country jobs in manufacturing. The Economic Policy Institute
released a study that found 2.8 million jobs, largely in manufacturing, have been lost since China entered the World Trade Organization. The Alliance for American Manufacturing, a trade group alliance between the United Steelworkers Union and leading manufacturing companies, says that China's currency manipulation and trade violations are responsible for devastating inroads in the electronic parts industry which alone accounted for 44% of increase in the trade deficit between 2001 and 2010. The yuan does not float against the dollar as other currencies do, but is pegged by China to maintain a comparative trading advantage. The report estimates the yuan is 28.5% undervalued against the dollar. China is already positioning itself to be the dominant source of green technologies, such as photovoltaic cells, an industry sector
identified by the Obamatron as a potential creator of many new jobs*. Instead of a green revolution creating jobs in this country, these new jobs are being created in China. Besides currency manipulation, the report cites state ownership and subsidies, intellectual property theft, and rare earth export restrictions as trade distortions that have caused the non-oil trade deficit to increase from 69.8% in 2008 to 78.3% in 2010 with a loss of 453,100 jobs, despite a global financial crisis. Unless the China trade is rebalanced, job losses will continue. Moving on the trade front against our largest creditor may prove difficult, however.
*The current administration is taking heat for a $535 million loan guarantee to a bankrupt solar company, Solyndra. Congressional Repugnants are implying that Solyndra got a loan guarantee when it was rejected by their previous administration because the largest Solyndra investor has ties to an Obama supporter. The fact is that a DOE official testified to Congress that the Bush administration selected Solydra from 143 submissions "for further development of information" and its application was eventually selected for approval by career civil service reviewers. Solydra executives have announced they will take the Fifth before the House Energy and Commerce Subcommittee.
