Recently the relationship between China and U.S has become a hot topic. The tension of trade and the rejection of microchip to ZTE by US department of commerce, drew lots of attention of public.
This week, the university of Illinois invited David Autor, the Ford Professor of MIT economics, to give a presentation about the lesson of China's shock.
Pro. Autor is specialized in labor economics, and the associate head of MIT economics. He is the Director of NBER Disability Research Center and Elected Member of American Economic Association Executive Committee. So his opinion is not only of high academic value, but also has great affect on the current government administration.
After a short introduction by the host, Pro. Autor began.
He conveyed his ideas by several graphs and curves. The very first graph demonstrated the comparison of manufacturing export shares of 3 countries, including China, U.S, and Germany. It was obvious that during the past 30 years, China's manufacturing export has grown rapidly into the largest single country. After 2005, China surpassed U.S, and about one year later, China's export on manufacturing sector was bigger than Germany. Pro. Autor pointed out that around 2001, the export of US started to drop, and that was the exact time that China joint WTO. Since then, China has enjoyed heavy tariff and other trading benefits for being the most favored nation status.
Pro. Autor covered the developing path of China and analyzed China's advantages to develop certain manufacturing industries, especially like the labor-intended industries, such as textiles and electronics. He admitted that from the traditional trading theories, the specialization of countries can benefit both countries' GDP. Because they can specialize in what they are good at and enhance their relative competitiveness. However, David also was skeptical that wether the average people can get a piece from the growing pie.The huge trade deficit is not under his consideration. Unfortunately, from his study, some shrinking industries have severe impacts on the labors. He doubted that maybe it was a fault to allow China to join WTO, and thus opened a fire-hole. His study that America's declining share in manufacturing export, causing by the rising of made in China, shows that the low skilled labors suffered the most. In his opinion, U.S has not done a very good job for the potential challenges since or even before China joint WTO, which they should. For instance, help lower skilled workers or unemployed to get more training opportunities to transfer to other occupations. Compared to America, however, Germany benefit a lot from trading. What interested me most was David combined the rising of Made in China with the election results and the marriage rate. I guessed that he was trying to explain the poverty of root American to the theme.
Pro. Autor came up with valuable ideas in prospects and policies.
1, China's rising has been fabulous for global welfare
2, For the developed world a challenge---but there's no going back
--In part, China Shock just accelerated the inevitable
--Not likely to recur --- China has developed
3, Shock has laid bare many labor market challenges
--Declining labor force participation and earnings of non-college adults
--Lost appetite for globalization
4, Countries were too sanguine about "free trade= free lunch" story
--And woefully unprepared accordingly
5, Will the next big shock emanate from Silicon Valley not China?
--And can we be bettered prepare next time...?
In the Q&A part, I heard a Chinese student asking the trade war between US and China. He took Walmart and Apple as examples, to show that America gained the most parts of Made in China. David argued that the lowered end labor lost their jobs. In addition, he thought he was right.
After the presentation, the reception part was more interesting. My classmates had their language parter with them, a wise, elegant old lady. While drinking ice tea and cokes, I got my chance talk to MIT professor David Autor. I was delighted to introduce myself and asking him several question just in front of me! I argued that artificial intelligence can also have negative effect on US employment. He agreed with me! When a Asian look girl told David SK suffered from the rising of China's manufacturing export, I debated with her that with my experience that the SK merchants want to pursuit commercial profits. Soon she escaped! Haha!
For me, the only regret was I did not make full use of the chance to take a picture with MIT professor. Perhaps, that will be my only chance to talk a MIT Ford professor face to face this life!