Category Archives: China

“Re-examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective”

From the paper by Zhi WangShang-Jin WeiXinding Yu & Kunfu Zhu:

The United States imports intermediate inputs from China, helping downstream US firms to expand employment. Using a cross-regional reduced-form specification but differing from the existing literature, this paper (a) incorporates a supply chain perspective, (b) uses intermediate input imports rather than total imports in computing the downstream exposure, and (c) uses exporter-specific information to allocate imported inputs across US sectors. We find robust evidence that the total impact of trading with China is a positive boost to local employment and real wages. The most important factor is employment stimulation outside the manufacturing sector through the downstream channel. This overturns the received wisdom from the reduced-form literature and provides statistical support for a key mechanism hypothesized in general equilibrium spatial models.

Ungated version here. This is a slightly older paper (2018). A paper with related findings by Feenstra and Sasahara (2018) here, while ungated working paper version is here.

This is a reminder that import competition has direct impacts, but international trade allows firms access to lower cost inputs, and benefiting from comparative advantage. Separate from the question of net benefits is whether costs imposed on those negatively impacted outweigh those who gain, either in dollar or “util” terms.

On “Intimidation” (and a very short, truncated history on the Chinese diaspora in America)

At the risk of excessive navel-gazing, a commentary on what responsibilities Asian-Americans have in calling out China. An Econbrowser reader writes:

[D]o I think Menzie is a China apologist? No. Do I think Menzie is thoroughly intimidated by China? Absolutely.

But he is hardly alone in this.

Nevertheless, there is a bigger picture. If China follows trend, if this trend leads to open conflict with the US, then Menzie will regret not having taken a more public and determined stand to argue for democracy in China. As I have stated: Our best hope for China’s peaceful rise to superpower status is the rapid development of that country’s internal democracy.

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“Kung Flu” in (Recent) Historical Perspective

On the 38th anniversary of Vincent Chin’s murder. From Politico:

President Donald Trump’s top spokesperson on Monday defended his use of the term “kung flu” to describe the novel coronavirus has sickened millions across the globe, asserting that the president was merely trying to emphasize the virus’ place of origin in China.

“The president does not believe that it is offensive to note that this virus came from China,” McEnany said Monday when asked about Conway’s condemnation of the term.

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