The U.S Treasury Department has designated China as a currency manipulator, and President Trump tweeted, “China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices.”
Consider each of these allegations:
Allegation: China is stealing American businesses and jobs.
FACT: According to data from the Bureau of Economic Analysis, since 2002, just after China joined the World Trade Organization, real U.S. manufacturing value added has increased by $512 billion, or 31.6 percent. Since 2003, the first year for which statistics are provided, China invested $1.4 trillion more in the United States than the U.S. invested in China, boosting business growth by helping keep interest rates low.
Allegation: China is hurting American jobs.
FACT: According to data from the Bureau of Labor Statistics, since China joined the WTO, the United States has added 17.5 million new private-sector jobs, a 16 percent increase.
Allegation: China is depressing American workers’ wages.
FACT: According to data from the Bureau of Economic Analysis, since China joined the WTO, employee compensation in the United States is up 78 percent. This includes a 31 percent increase in total compensation for manufacturing employees.
Allegation: China is harming American farmers’ prices.
FACT: According to data from the Bureau of Economic Analysis, since China joined the WTO, net annual farm income increased by $36 billion, or 93 percent. According to data from the Department of Agriculture, agriculture exports to China have increased by 858 percent.
Determining whether China is a currency manipulator should be a fact-based decision, not one driven by politics. Many of China’s practices are indefensible, and it is in both countries’ best interests for China to become more market-oriented and open. But U.S. efforts should not be based on a misunderstanding of the impact trade with China has on the United States. Daniel Patrick Moynahan once observed, “Everyone is entitled to his own opinion, but not to his own facts.” The facts are that trade with China, while distorted and imperfect, has led to increased manufacturing, more jobs, better wages, and higher farm prices.