2018年CRI The unknown facts of US-China Trade: How does China help US economic transition?

 

When Trump¹ criticized global trade and resorted to tariff² barriers, he neglected the interdependence between China and the US economy, described as “structurally complementary” by experts. 

How did this interdependence come about? Some argue that it all began when global corporates, with US companies to the fore⁴, embraced the outsourcing business model on a massive scale, in the 1980s. 

“They have made use of the fact that different countries have different comparative advantage. It is economically efficient and useful to exploit those comparative advantages from different countries, as you think about how to put together a car or an iPhone,” said Louis Kuijs, head of Asia Economics. 

The US, who is in charge of R&D, chose to produce and assemble products in low-cost places such as China with components⁵ from different countries, and then the US distributed these products across the world, according to Li Yong, senior fellow of China Association of International Trade. 

As experts said, for the US, the increasing emphasis on the technology and service sectors⁷ led to a lot of manufacturing jobs being outsourced, especially lower value-added ones. 

The beginning of this trend coincided with China’s launch of the reform and opening-up policy.

Drawing in foreign investment and boosting exports were the priorities for China at the time. Foreign companies, including US ones, set up factories in China, attracted by both the low labor⁸ costs and the huge market potential. Before long, China was experiencing a boom in custom manufacturing that used materials and designs supplied by foreign companies. 

As new factories sprang up, millions of migrant workers from rural areas flocked to cities like Dongguan in search of jobs. It was on their shoulders that the country was raised to its leading position in global manufacturing. 

Being at different stages of development, the US and China are pursuing different development modes. As a result, they are a long way apart on the global value chain. 

In the US, the manufacturing sector⁶ is in a state of gradual decline, as the economy completes the transition from manufacturing-based to technology, innovation and service-oriented. The IT industry has become a major driver of economic growth and job creation. 

In the 1990s, when the US experienced a period of sustained growth rarely seen since the Second World War, the so-called “New Economy” flourished, driven by information technology and innovation. 

But under the Trump administration, the decline in manufacturing has been labeled an economic failure. Outsourcing has been blamed for a decline in employment, with China accused of stealing American jobs. 

The fact is that the contribution of manufacturing to GDP in the US shrank to just 12 percent in 2016, while jobs created by manufacturing dropped to 9 percent of total employment. Yet, the overall economic situation shows that outsourcing has not hurt the US economy, but rather boosted it. 

In 1991, growth in the US was 4 percent, as the country enjoyed one of the longest periods of economic prosperity in its history. The unemployment rate fell from 7.4 percent in 1992 to 4.3 percent in 1998, the lowest in three decades.

These figures point to the US economic transition being a success, with outsourcing helping⁹ to make the economy stronger. Clearly, this was the right strategy, with new economic sectors creating jobs to make up for those lost by outsourcing manufacturing. 

As the US economy has moved to the high end, China and other developing countries have picked up what the US has left behind – namely low-end manufacturing. Trade experts say the two economies are highly complementary, with China’s ability to produce and meet America’s demand. Naturally, this structural³ difference also results in an imbalance in trade.

1 trump   

n.王牌，法宝；v.打出王牌，吹喇叭

参考例句：

• He was never able to trump up the courage to have a showdown.他始终鼓不起勇气摊牌。
• The coach saved his star player for a trump card.教练保留他的明星选手，作为他的王牌。

2 tariff   

n.关税，税率；(旅馆、饭店等)价目表，收费表

参考例句：

• There is a very high tariff on jewelry.宝石类的关税率很高。
• The government is going to lower the tariff on importing cars.政府打算降低进口汽车的关税。

3 structural   

adj.构造的，组织的，建筑（用）的

参考例句：

• The storm caused no structural damage.风暴没有造成建筑结构方面的破坏。
• The North American continent is made up of three great structural entities.北美大陆是由三个构造单元组成的。

4 fore   

adv.在前面；adj.先前的；在前部的；n.前部

参考例句：

• Your seat is in the fore part of the aircraft.你的座位在飞机的前部。
• I have the gift of fore knowledge.我能够未卜先知。

5 components   

（机器、设备等的）构成要素，零件，成分； 成分( component的名词复数 )； [物理化学]组分； [数学]分量； （混合物的）组成部分

参考例句：

• the components of a machine 机器部件
• Our chemistry teacher often reduces a compound to its components in lab. 在实验室中化学老师常把化合物分解为各种成分。

6 sector   

n.部门，部分；防御地段，防区；扇形

参考例句：

• The export sector will aid the economic recovery. 出口产业将促进经济复苏。
• The enemy have attacked the British sector.敌人已进攻英国防区。

7 sectors   

n.部门( sector的名词复数 )；领域；防御地区；扇形

参考例句：

• Berlin was divided into four sectors after the war. 战后柏林分成了4 个区。 来自《简明英汉词典》
• Industry and agriculture are the two important sectors of the national economy. 工业和农业是国民经济的两个重要部门。 来自《现代汉英综合大词典》

8 labor   

n.劳动，努力，工作，劳工；分娩；vi.劳动，努力，苦干；vt.详细分析；麻烦

参考例句：

• We are never late in satisfying him for his labor.我们从不延误付给他劳动报酬。
• He was completely spent after two weeks of hard labor.艰苦劳动两周后，他已经疲惫不堪了。

9 helping   

n.食物的一份&adj.帮助人的，辅助的

参考例句：

• The poor children regularly pony up for a second helping of my hamburger. 那些可怜的孩子们总是要求我把我的汉堡包再给他们一份。
• By doing this, they may at times be helping to restore competition. 这样一来, 他在某些时候,有助于竞争的加强。