Chinese imports earn more than it costs

Photo: John Macdougall, Agence France-Presse
The impact of imports from China on the portfolio of the Canadians was particularly felt on the price of products such as clothing, shoes and furniture.

The downward pressure exerted on prices by chinese imports was far more than offset the economic cost of the jobs they lost in the manufacturing sector in Canada, concludes a study commissioned by Ottawa.

Nicknamed ” the effect of Wal-Mart “, the increase in Canada from the sale of goods cheaper from China from 2001 to 2011 has led to an average increase of 2.1% per year rather than 2.2 % of the price of all goods and services in the country, has calculated the Centre for the study of living standards, Ottawa, in a study released Tuesday and conducted on behalf of the canadian department of foreign Affairs. This very small gap, which, after ten years, resulted in a cumulative increase in the prices of consumer goods 17.6%, rather than 20 %, it has nevertheless earned to canadian consumers total savings of 8.74 billion dollars. However, this economic gain compares more than favourably with the cost inflicted by the loss, at the same time, 113 of 500 jobs in the manufacturing sector and another study of the same researchers had allocated to China and which had been estimated at $ 1.1 billion.

Representing only 3.2% of all imports in Canada in 2000, China was at 11 %, only ten years later, and 12.6 % in 2017.

The impact of these chinese imports on the portfolio of the Canadians was particularly felt on the price of products such as computers, electronic devices, clothing, shoes and furniture, the study finds, which would be the first in Canada to draw this balance sheet. In the case of the computer, for example, chinese imports, and the competitive pressure that they exert on the other, have not only slowed price growth but have contributed to more than a third of their 15% decline.

Data

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Gains diffuse, losses concentrated

Research in other countries have concluded that these economies had benefited as much to the richest households as the poorest, explains the author of the study. However, it may be that they have been largely invisible since they were equivalent, on average, $ 55 per year, or 546 $ for the studied period.

Conversely, the influence of China has made much more concrete for the 113 500 workers who lost their jobs at the same time in the manufacturing sector.

As their average wage was approximately 43 000 $ per year, and that it took a dozen weeks, on average, to find another job, their losses were a little less than $ 10,000 per person. Gold, expressed otherwise, the positive effects of chinese imports to consumers as a whole were equivalent to nearly $ 77,000 for the jobs lost.

The study concluded that the economic benefits to Canada’s trade with China has exceeded its negative impact, but also that we would have had the means to help and compensate more generously to his victims.

To finish with ” the hyperglobalisation “

The deputy secretary general of the united Nations Conference on Trade and Development (UNCTAD), Isabelle Durant, had a different story to offer, on Tuesday during a video conference organized by the Conseil des relations internationales de Montréal (CORIM). According to her, the crisis caused by the pandemic coronavirus ” has highlighted that the model of the hyperglobalisation, where 40 % of global manufacturing is concentrated in a single region of the world, poses a problem of serious addiction. “It makes today’s account, she said, that with long value chains that benefit so few of its many participants, and where everything is supposed to be” just in time “, ” the system is terribly vulnerable.”

With the Exception of medical goods and basic food, the former belgian deputy prime minister cautions against these leaders of developed countries who would like to now close their borders in the name of the defence of the sovereignty of the industrial.

“It’s a bit easy to talk about local production and short circuits, when one has taken advantage of international trade to give all the comfort that we have. Do you believe that it would be better if everything was under our control, it is too simple. This is not how it works. “

The option of regional

Rather than trying to attach costs to the major in global value chains led from the United States, China or Europe, the developing countries should form regional trading areas better adapted to their reality and giving more space to local businesses, explained Isabelle During service Duty.

In the end, the only way to be able to rely on a more level playing field and not be sandwiched in the struggle of titans between the United States and China would be to go through a multilateral forum such as the world trade Organization. But now, the WTO faces many challenges, including the failure of the negotiations, which were supposed to make a better place in the developing countries, the open hostility of the White House and the premature departure of its director general.

“This will not be easy, repeat Isabelle Durant. Not everything will, of course, not by an operation of the Holy Spirit, or rather by an operation of the COVID. “

To see the video