China revaluation would hurt US jobs - study

Thu Apr 15, 2010 10:25am EDT

Related Topics

* China revaluation, tariff would hit U.S. jobs

* China seen benefiting from appreciation

GENEVA, April 15 (Reuters) - Extensive outsourcing by U.S. industry means that a revaluation of the Chinese yuan sought by many U.S. politicians would destroy U.S. jobs, a study by independent economists and other experts said on Thursday.

The study, published by the Centre for Economic Policy Research (CEPR), was published on the day that the U.S. Treasury had been due to issue a report widely expected to brand China a as a currency manipulator.

But Treasury Secretary Timothy Geithner decided on April 3 to delay the report, defusing rising tension over China's currency between Beijing and Washington. [ID:nN03183056]

The CEPR study, comprising 28 analyses of the issue, concludes that a yuan revaluation of only 5 percent would eliminate China's trade surplus with the world.

But it would only cut the U.S. trade deficit with China by $61 billion, according to the study, edited by trade economist Simon Evenett.

A 10 percent revaluation of the yuan would improve the U.S. deficit by $111.5 billion -- not enough to eliminate the U.S. shortfall with China.

Because so many U.S. exporters buy parts and components from China, the revaluation would raise their costs, resulting in a hit to U.S. exports that would cost 424,000 U.S. jobs, it said.

If the U.S. imposed a 10 percent tariff across the board on Chinese imports and China responded in kind with a similar 10 percent duty on U.S. exports, 947,000 U.S. jobs would be lost.

"Recent U.S. proposals remind me of the adage: 'Be careful what you wish for'," Evenett said.

The study, published on the economic policy website vox.eu, found that the yuan was undervalued by between 2.5 percent and 27.5 percent.

But economists, including some from China, found that China would benefit from a revaluation, and that appreciation could stimulate Chinese exports and push China into higher-value manufacturing. (For full report go to link.reuters.com/jas87j ) (Reporting by Jonathan Lynn; Editing by Toby Chopra)

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Comments (3)
jwws9999 wrote:
always amazes me when these think tanks like CEPR get their paid for studies (probably by china) posted as some sort of news on the internet. you could probably find a dozen studies that say it would be good for US jobs. it reminds me of what my dad used to say, don’t believe everything you read

Apr 16, 2010 6:21am EDT  --  Report as abuse
The revaluation of the Yuan will not bring back the hundreds of thousands of jobs lost to China in the past 8 years of the Republican Bush administration. The damage is already done. These companies decided to manufacture in China because of dirt-low labor rates. A higher Yuan can only help reduce the trade deficit with China and in the long-term, this is better for our economy. These think tank reports like the CEPR are untrue.

Apr 16, 2010 6:55am EDT  --  Report as abuse
bikebrainiac wrote:
yes, revaluation of the Yuan will cost jobs. Question? How many US jobs have been lost and will continue to be lost over the artificially low exchange rate? I bet that number is a lot higher.
The smart American consumer will hopefully see this and start making informed decisions about WHERE their good are manufactured when they go to buy.

Apr 16, 2010 7:14am EDT  --  Report as abuse
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