Import Competition or Industrial Transfer:Revisit "China Syndrome"
In recent years,the concept of"China Syndrome"has gained traction within the Western academic circle,positing that China's exports to the United States exert a comprehensive and significant negative impact on the labor market of the United States.This paper contends that the previous studies have overlooked direct investment of the United States in China,resulting in the failure of instrumental variables to meet exclusivity requirements and the consequent serious bias in estimation outcomes.Therefore,the paper introduces the variable of direct investment of the United States in China and constructs instrumental variables with Bartik method to examine the impact of trade and investment on the labor market of the United States.The research shows that:under the dual effects of China's exports to the United States and outward foreign direct investment of the United States,the labor force of the United States will experience cross-regional mobility,which contradicts the core hypothesis of the research framework of"China Syndrome"and shakes the foundation of its conclusions;even if its research framework is accepted,China's exports to the United States have no comprehensive and significant negative impact on the overall level of the labor market of the United States,but rather significantly increase the wage level of manufacturing workers after the variable of direct investment of the United States in China is included;although direct investment of the United States in China exerts a significant negative effect,the paper estimates that its total impact on the decline in manufacturing employment of the United States is only 2.1％.Given that direct investment of the United States in China only accounts for a very small portion of the total outward direct investment of the United States,the problems in the labor market of the United States should not be attributed to China.
Sino-US tradeforeign direct investmentlabor marketindustrial transferBartik instrumental variable
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