Trade Gap With China Cost Pennsylvania 95,700 Jobs, Keystone Research Center Reports

Mar 24, 2010, 09:42 ET from Keystone Research Center

HARRISBURG, Pa., March 24 /PRNewswire/ -- Since 2001, the U.S. trade deficit with China has increased by 274%, a trend that has eliminated an estimated 95,700 jobs in Pennsylvania, the Keystone Research Center reported today, based on a new study by the Economic Policy Institute (EPI) in Washington DC.

"A major factor in the growth in our trade deficit is China's manipulation of the value of its currency to gain an advantage in our trading relationship," said Stephen Herzenberg, PhD, Keystone Research Center Economist and Executive Director. "With U.S. unemployment rates not yet on the downswing, continued currency manipulation by the Chinese threatens to further delay and dampen our recovery."

Under normal conditions, rising Chinese exports would lead to a rise in the value of its currency, but since 2001 the Chinese have prevented this market adjustment by acquiring more than two trillion dollars in foreign exchange reserves.  

"A full recovery from the 'Great Recession' will require growth in the private sector and the usual suspects to lead such a comeback -- residential and commercial construction -- remain deeply depressed," said Herzenberg. "This leaves export-oriented manufacturing as one of the few sectors of the economy that could kick start a recovery, but U.S. manufacturers have been handicapped by Chinese currency manipulation, which has been estimated by some to have inflated the price of U.S.-made goods in China by as much as 40%."  

Based on the number of jobs lost, the report identifies the 6th, 8th, 15th, 16th, 17th and 19th Congressional Districts as those in Pennsylvania hardest hit by trade with China (see Table 1 online at These districts include South Central and Southeast Pennsylvania metropolitan regions anchored by smaller cities in which manufacturing remains a lynchpin of the regional economy -- York, Lancaster, Reading/Berks, and the Lehigh Valley (for a map showing the location of Pennsylvania Congressional Districts and the associated job loss, go to

Based on jobs lost as a share of total employment, two additional Congressional Districts have been among the hardest hit -- District 5 in rural North Central Pennsylvania and District 3 in the Northwest, including Erie.

The U.S. House Ways and Means Committee is holding a hearing this week to examine China's currency manipulation.  In the Senate, a bipartisan group of lawmakers introduced legislation last week to address the issue.

"We have allowed the Chinese government to game the system for far too long, with serious consequences for the U.S. economy," said the report's author, EPI economist Robert Scott.  "The Treasury Department should publicly declare China to be a currency manipulator, and the Congress should authorize tariffs of at least 25% if China doesn't start playing by fair rules."

A copy of the full report is available online at

The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. Learn more:

SOURCE Keystone Research Center