Is China stealing American jobs? No, it’s not theft but those jobs are leaving.

An original answer based on my Quora.com response.

Since the 1970’s, China, with the largest population worldwide, has been opening up its economy. Any industry it grows in is going to reverberate globally more so than other comparable nations because of the population alone. For example, look into the global scare that happened when textile regulation ended. Numerous countries were justifiably worried because of China’s population and expertise in textile.

In the 1990’s America further liberalized its economy with a sharp easing of regulation; this spurred American FDI (foreign direct investment) in other countries to soar. FDI can be thought of physically as actually building the factory and hiring the workers (all that takes an investment, right?). Because of deregulation, it was more profitable to move production to a place where it’s cheaper to produce and less expensive on labor. Why do they do this? American consumers demand quick, cheap and highly variable products. American companies are maximizing their profits and also trying to satisfy American consumers.

It’s as simple as that, and if you are told otherwise, please, critically question it.

60% of all Chinese exports are from foreign-owned companies. So, 60% of what China sells is because of foreign corporations desiring it. (A Trade War with China?, Neil Hughes, 2005).

As an under-developed nation like China, the production it will specialize in will be low-value production. Low-value production has the benefit of higher labor numbers, which means a greater quantity of jobs (remember, they are low paying jobs). When low-value production moves from America to an overseas location, so to go the numerous jobs. Higher-value production, which America still overwhelmingly leads in, is more nuanced, advanced, and doesn’t require as many workers.

Exporting cheap production has caused China to become a powerhouse in low-value products. American workers can not compete with that. A more advanced economy, as in the US, will mean the workers are also more sophisticated; this looks like higher wages, higher education levels, more infrastructure, more R&D, more democracy, and so on. If the US wants those low paying jobs and production back, then wages, the way of life and condition within the US will suffer greatly. Educating those poor US workers is one way to counter-act a low-wage country. Those workers have to adapt until corporations follow greater amounts of corporate social responsibility. However, as China develops so to will its labor force, wages and value of production.

Quite simply, all the complexities and nuances regarding currency manipulations and so on all stem from 2 points: China opening up and partaking in international organizations. And the US deregulating in the 1990’s, which caused American companies to go to the ‘new kids on the block’. Again, as an under-developed economy, China has to control its currency. Why wouldn’t they peg it to the status-quo leader in global economics? When it reaches a ‘developed’ state, it has every intention of re-evaluating its currency. Currency manipulation is highly connected to this topic and provides further evidence in support of my argument but is entirely too complicated to cover briefly. Suffice to say; there has not been any evidence to support that China will not re-evaluate it’s currency in the future.

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