U.S.-China Trade: A Different View

May 23, 2005

Even as China begins to impose duties on some of its apparel exports and reports circulate that People's Republic may be looking for ways to loosen ties between the yuan, its currency, and the U.S. dollar, Merrill Lynch & Co. labels as "misdirected" continuing criticism of China's fixed-exchange-rate policy and growing concern -- to the point of talk about retaliation--over China's increasing economic and financial prowess. Contends the New York-based financial firm, "All the talk of trade retaliation would be self-defeating and only serve to hurt the U.S. consumer, who would only see real wage growth recede even further without the lower every-day prices nurtured by China's low-cost export prowess."

Yes, U.S. imports from China and outsourcing production to China have had a negative impact on "some domestic manufacturers," admit Merrill economists Kathleen Bostjancic and Tom Porcelli. "But, the contraction of our manufacturing base began long before China became the country that held the largest [trade] deficit with the U.S.," they contend.

What's more, U.S. companies themselves account for much of the increase on the U.S. import side of trade with China. "In essence, much of the increase in the trade deficit with China in recent years is little more than U.S.-owned companies shipping back their production to the home market," assert Merrill's economists.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.