U.S., China taking different paths on manufacturing

March 6, 2012

China continued to widen its manufacturing export lead over the U.S. in 2011, according to a new report from the Manufacturers Alliance for Productivity and Innovation. Industry Week reported that this deficit came despite an increase in exports from American manufacturers.

According to the news source, U.S. manufacturers increased their exports in 2011 to $1.147 trillion, but the deficit between the two countries still rose by $48 billion. Although the gap widened, American companies saw exports rise by $123 billion, an increase of 12 percent.

Industry Week reported that the reason the gap became wider was due to the Chinese manufacturing sector reporting a gain of $302 billion in exports for 2011. The country was able to report a 23 percent rise of its total exports.

According to the news source, currency issues have had a significant role in the widening of the gap, as Chinese policies have favored an expansion of their sector.

"The most important international policy issue influencing price-sensitive trade in manufactures is the Chinese policy of maintaining a greatly undervalued currency," Ernest Preeg, a senior advisor for MAPI, told Industry Week. "Chinese official purchases of $3 trillion over the past 10 years have been, far and away, the largest-scale and most protracted currency manipulation in IMF history. In any event, with sagging Chinese domestic growth, there will be even stronger Chinese resistance to revaluing its currency and thus reducing the strong, export-driven growth momentum for manufactured exports."

While the U.S. is looking to reorganize its policies concerning trade with China and currency valuation, lawmakers are looking to enact a change by shaping domestic efforts. According to a release from the office of Congressman Chaka Fattah (D-Pa.), the representative is pursuing an agenda that will help to stimulate growth in manufacturing that stems from the use of innovative technology.

According to the release, Fattah, the senior Democratic Appropriator for the Department of Commerce, is a leading voice in Congress for federal money and technical support for manufacturing innovation, especially for small businesses. 

He will address the Manufacturing for Growth Convention in Orlando, Florida, on "The Federal Government's Role in Growing the Manufacturing Economy." This marks the second straight year that the manufacturing companies who attend the conference have invited the Pennsylvania congressman, who is slated to outline the trends in the industry, and the challenges and opportunities for American businesses, according to the release.