Since China was granted Permanent Normal Trade Relations status by the U.S. in 2000, conditional on its accession to the WTO the following year, study after study has been produced to show how badly that’s worked out for U.S. workers in manufacturing industries.
Few studies have looked though at the effect on China’s labor force; but the paper highlighted today does just that. Difei Ouyang and Weidi Yuan, both from the University of Geneva, have looked at China in the period 2000~2007, when the adjustment was most pronounced, and their observations are, well to me at least, shocking.
For every manufacturing job lost in the U.S. China gained eight. Eight!
The collateral benefits include increased urbanization and a rise in agricultural productivity as the left-behinds had to work harder to take up the slack of the get-up-and-go-ers.
It’s not all good news though. Despite the increase in manufacturing jobs and productivity the wages within those jobs were fairly static. This is what you’d expect when a lot of labor is suddenly available but the authors highlight a lack of progress in productivity that will now have to be addressed if China is to continue to benefit.
The paper concludes with some blah about whether or not China is at or through the Lewis Turning Point but that, IHMO, is where the hard science runs out and wobbly conjecture begins.
One question at least is incontestably resolved. Has China’s increased participation in the global economy since 2000 resulted in a net gain to the well-being of the world’s citizenry? Only the hardest-hearted would attempt to argue this was not so.
You can access the paper in full via the following link Global Job Reallocation.
Happy Sunday.