Buy "Made in China" goods? Benefits to U.S. may surprise you
HONG KONG -- Americans are getting more than just cheap prices from products made in China.
Research this month from the Federal Reserve Bank of San Francisco shows that for every dollar spent on a China-made item, 55 cents go to U.S. businesses for services such as marketing and sales. Last year, 2.7% of U.S. consumer spending went to products made in China, according to the study.
The findings may surprise U.S. consumers, given the widespread belief that the most spending is on foreign-made items, says Bart Hobijn, a senior research adviser at the San Francisco Fed who co-wrote the report with economist Galina Hale. "But consumer spending means a lot more than going shopping," he says. "If you get a haircut, pay your electricity bill, go to the movies, that's all part of consumption."
The research comes amid heated debate about the value of foreign-made goods as the U.S. unemployment rate — which dipped slightly to 9.1% in July after rising for three consecutive months — remains high. The data underscore the complex nature of the U.S.-China trade relationship, and how interlinked the countries' economies have become.
Overall, the vast majority of goods and services sold in the U.S. are made in the country, the San Francisco Fed's researchers found. Shoes and clothing are an exception, with nearly 36% of U.S. dollars spent on Chinese-made items, compared with 25% on U.S.-made products.
Certain products, including clothing, are no longer made in the U.S. "at competitive prices or in commercial quantities," says Craig Shearman, a spokesman for the National Retail Federation. "So the question isn't whether you source from China vs. the U.S., but rather China vs. India, or China vs. Vietnam."
Retailers stock foreign-made products, Shearman adds, to provide consumers with affordable options.
Yet, with inflation and labor costs rising in China, it may only be a matter of time before U.S. consumers see higher prices, says Dennis Yau, director-general of the Federation of Hong Kong Industries, a trade group for manufacturers, many with factories in the Pearl River Delta.