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‘China’s rise’ cannot be blamed for regional job losses in developed countries, IMF finds

  • Competition from China is not the primary reason for regional job losses in rich countries, new International Monetary Fund (IMF) research finds
  • Study finds technological advancement is bigger driver of unemployment, undermining populist argument China is stealing manufacturing jobs

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The International Monetary Fund said automation displaced more jobs in rich countries than China’s growing productivity. Photo: SCMP

Automation, rather than market competition from China, can be blamed for regional job losses suffered in developed countries, including American rust belt states, according to new research by the International Monetary Fund released on Wednesday.

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“Increases in import competition in external markets associated with the rise of China’s productivity do not have marked effects on regional unemployment,” the Washington-based fund said in an academic paper. “Only technology shocks tend to have lasting effects, with even larger unemployment rises for vulnerable lagging regions.”

The paper, which looked at regional disparities within advanced countries, undermines a key argument pushed by US President Donald Trump in the ongoing trade war between Washington and Beijing - that China has been stealing American technology and jobs.

Although the research did not mention Trump, the International Monetary Fund (IMF) said the argument that market competition displaced jobs was flawed as imports from China could only cause job losses in the near term and such impact “quickly abates”.

Only technology shocks tend to have lasting effects, with even larger unemployment rises for vulnerable lagging regions.
IMF report

The US goods trade deficit with China hit a record US$419.2 billion in 2018, which the Trump administration has blamed for a decline in US manufacturing jobs.

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