Trading with China can be very confusing.
As Chinese imports proliferated from 1990-2007, factory employment in the communities surrounding Raleigh N.C. plummeted. According to the WSJ, the 40% dip in factory jobs led to a government spending increase on food stamps, unemployment insurance and disability payments.
By contrast, in the communities surrounding Cleveland, the challenge of Chinese imports had a very different result. Facing less demand, factory owners switched to goods requiring more technology, more technical expertise. Consequently, stats covering the 10 counties surrounding Cleveland indicated that the employment to population ratio actually went up.
Which is more typical? Raleigh or Cleveland?
Each is a possibility. On a broader scale, one academic study suggests that the Raleigh experience is more typical. However, challenging the study, one Dartmouth economist suggests that the benefits of cheap China imports might be tough to quantify when looking at one geographic area. For example, when trade with China leads to cheaper U.S. goods and added export business, the numbers are not added to stats about the Raleigh area.
The bottom line?
Maybe one question: How to cope with short-term joblessness when in the long-term adapting to trade should be beneficial.
Include Chinese demand?
“The China Syndrome”
The Economic Lesson