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China Is Not The Source Of Our Jobs Problem

Republicans and Democrats, liberals as well as conservatives, have bought into anti-Chinese trade demagoguery.

Former House Speaker Nancy Pelosi suggested that tariffs against China are a "key part of our 'Make It in America' agenda."

During his 2010 campaign, Senate Majority Leader Harry Reid, D-Nev., called his Tea Party-backed Republican challenger, Sharron Angle, "a foreign worker's best friend."

In a recent news conference, President Obama gave his support to the anti-China campaign, declaring that China "has been very aggressive in gaming the trading system to its advantage," adding that "we can and should take action against countries that are keeping their currencies undervalued ... (and) that, above all, means China."

Republican 2012 presidential candidates have also jumped on the anti-China bandwagon.

Mitt Romney wrote: "If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. ... I will begin on Day One by designating China as the currency manipulator it is."

Former Sen. Rick Santorum, R-Pa., was even more challenging, saying, "I want to go to war with China."

Let's look at the magnitude of our trade with China. An excellent place to start is a recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled "The U.S. Content of 'Made in China.'"

One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department's Bureau of Economic Analysis.

Hale and Hobijn find that the vast majority of goods and services sold in the United States are produced here.

In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5% came from China.

A total of 88.5% of U.S. consumer spending is on items made in the United States, the bulk of which are domestically produced services — such as medical care, housing, transportation, etc. — which make up about two-thirds of spending.

Chinese goods account for 2.7% of U.S. personal consumption expenditures, about one-quarter of the 11.5% foreign share.

Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes.

In the clothing and shoes category, 35.6% of U.S. consumer purchases in 2010 were items with the "Made in China" label.

Much of what China sells us has considerable "local content." Hale and Hobijn give the example of sneakers that might sell for $70.