(Bloomberg) --
Donald Trump's claims that China's suffered massive manufacturing job losses because of his trade tariffs are ‘delusional' and employment in the industry has fallen at a slower pace over the past year than before tariffs were imposed.
That's according to veteran China watcher Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington. A Trump tweet in July claimed that China lost 5 million jobs, two million of them in manufacturing, and was seemingly based on a report by Beijing-based China International Capital Corp., said Lardy.
But while the report said those jobs were lost since July 2018, when tariffs were first imposed, Lardy notes the report also said manufacturing jobs fell almost 8 million a year between 2015 and 2017 -- a much faster rate.
“Rather than trade, the decline in employment in this part of the Chinese economy primarily reflects improved labor productivity and the slowing growth of broad manufacturing relative to services,” wrote Lardy, author of “The State Strikes Back: The End of Economic Reform in China?,” in an Aug. 29 note. “Total employment continued to expand throughout this period because of rapidly expanding demand for labor in services.”
While Chinese exports to the U.S. have fallen by about $30 billion, or 13%, since tariffs were first imposed, its exports to the rest of the world have expanded by more than enough to offset the loss of sales to America, says Lardy.
And sales in industries most exposed to U.S. tariffs since July and September last year have expanded, he says. While employment in those exposed export industries fell, the decline is smaller than the average for overall manufacturing, said Lardy.
“Basing trade policy on a bogus premise may be an effective way to sell it to the U.S. public, but it is hardly likely to work with the Chinese,” he said. “Employment losses due directly to the the trade war seem to be de minimis.”
To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, ;Jeffrey Black at jblack25@bloomberg.net, Karthikeyan Sundaram
©2019 Bloomberg L.P.
With assistance from Bloomberg
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
