US, China and the American Job Creation

What has been happening in China – and is likely to be followed by the emergence of other Asian markets – is the increasing development of a substantial middle class consumer base. Today, China has some 250 million middle class consumers, with that figure expected to rise to 600 million by 2020. Once other Asian countries such as India are factored in (another 250 million middle class consumers today), and ASEAN in addition to this (at 100 million middle class today), then the true Asian picture begins to emerge. Right now, Asia is host to a massive middle class that is able to purchase imported products with the total number of consumers at roughly 600 million right now, growing to well over 1 billion by 2020.

It is no wonder, then, that American businesses are starting to look overseas in increasing numbers at these potential markets. It is also beginning to have an effect on American job creation. China has especially been criticized for taking American jobs away by falsely subsidizing its manufacturing businesses. That is an issue for the politicians and World Trade Organization to debate and deal with, but it should also be noted that while much of China’s rise has been linked to its WTO accession back in 2001, those same 11 years have seen U.S. exports to China rise by 440 percent according to the International Trade Center.

In terms of the impact on American job creation, it appears there are two main drivers behind this that are directly related to the demographic changes Asia and Europe are going through, although these are not driven by increasing labor costs in China per se. According to a recent report from the Boston Consulting Group, the United States will have an export cost advantage of 5 percent to 25 percent over Germany, Italy, France, the United Kingdom and Japan in a range of industries. Among the biggest drivers of this advantage will be the costs of labor, natural gas, and electricity. As a result, America could capture 2 percent to 4 percent of exports from the four European countries and 3 percent to 7 percent from Japan by the end of the current decade. This phenomenon, known as “re-shoring,” will see jobs that have largely been based in Europe and Japan start to come back to America…

Choosen excerpts by JMM from

via Letters from America: U.S. Exports to Asia and American Job Creation | China Briefing News.