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Claim Wal-Mart China imports cut jobs debated

By Paul Welitzkin in New York | China Daily USA | Updated: 2015-12-10 12:06

Has Wal-Mart Stores Inc caused the loss of 400,000 jobs in the US because it imports goods from China?

A report from the Economic Policy Institute (EPI) on Wednesday said that is the number of jobs lost in the US between 2001 and 2013 because of imports from China by the US's largest retailer and biggest importer. The report also said the imports by the Arkansas-based company may have accounted for 15.3 percent of the growth in the US trade deficit with China in that time period.

EPI is a think tank headed by Richard Trumka, who also serves as the president of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest union federation in the US. It has a track record of targeting Wal-Mart's labor policies.

While Wal-Mart's import of Chinese goods probably resulted in job losses in the US, it is difficult to identify all of the winners and losers in the past and those from the future because of the dynamic nature of international trade and job creation, analysts said in response to the EPI report.

"Given that Wal-Mart was focused on buying from China from 2000 to 2012, there were certainly job losses in that time period. Most companies were moving procurement to China so it wasn't just Wal-Mart. A lot of big names moved manufacturing to China," said Hal Sirkin, senior partner and managing director of the Boston Consulting Group and a professor at Northwestern University's Kellogg School of Management.

"EPI's methodology is rigged. They assume imports automatically displace US production and thus jobs. But, if Wal-Mart sourced only from the US, prices would rise, demand would fall, and jobs would disappear. And then there is the creation of jobs through imports," said Derek Scissors, a scholar on China at the American Enterprise Institute.

Sirkin believes the focus should be on where Wal-Mart is going with Chinese imports rather than where it has been, noting the company's high-profile campaign to purchase $50 billion of US-made products by early in the next decade.

"Since 2012, Wal-Mart has focused on US manufacturing where it is economic to do so and it is in the early stages of bringing jobs back to the US. It takes time to set up systems to do this. They say they will add another $50 billion in sales of US-made goods at a run rate that will get to $50 billion per year by 2023," he said.

Wayne Morrison, a specialist in Asian trade and finance with the Congressional Research Service in Washington, said the issue has too many factors to just boil it down to the trade deficit.

"They (EPI) tend to focus on the trade deficit and make overly simplistic assumptions on employment," he said in an interview. "How many manufacturing jobs were lost to advances in efficiency in that time period? Apple designs the iPhone here in the US. They assemble it in China with parts from all over the world. The product is then shipped back to the US for distribution and marketing which creates US jobs."

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