A new study released Monday shows if the U.S. allows China’s largest freight railcar manufacturers to enter the country, it could result in thousands of American jobs lost across several industries.
According to a report published by Oxford Economics, new entrants such as China into the U.S market are “threatening domestic competitiveness.” It even claims the “fallout” is already taking place nationwide in passenger rail manufacturing, with as many as 65,000 U.S. rail jobs at risk.
Several industry sectors remain at risk if U.S. freight car production is moved abroad. In fact, the study estimates up to 10,020 jobs could be lost in the business service industry and up to 22,050 for manufacturing. Other industries such as trade, transportation, and utilities could be hit with a loss of up to 9,980, whereas leisure and hospitality sectors could risk losing as many as 5,420 jobs.
The U.S. freight rail network is a $60 billion industry covering 140,000 rail miles and supporting 221,000 jobs, according to the Federal Railroad Administration.
Some experts fear that Chinese corporations could begin selling Chinese-manufactured freight railcars well below market price, thus forcing U.S. freight railcars manufacturers to move overseas or close their doors.
Oxford Economics estimates a minimum loss of 5,090 U.S. jobs from increased Chinese involvement in production and a maximum loss of 64,280 U.S. jobs.
President of a US-China Chamber of Commerce Siva Yam, who facilitates partnerships between businesses in China and the U.S., also voiced concern about the imposed threat of China on American jobs, saying: “It seems [as] though the more investments come from China, the more jobs are going to lose.”
Oxford Economics claims its findings are largely based on what occurred in Australia after the country moved its railcar production to China. The report alleges that Beijing-backed firms can borrow money far below the market rate and receive large subsidies, in turn, driving down the price of the products compared to other countries.
A strong Australian dollar reduced the country’s manufacturing competitiveness, and increasingly free trade with China allowed the Beijing-backed companies to take a greater share of Australia’s freight railcar production, the report said.
As a result, Oxford Economics claims that “all Australian manufacturers have largely ceased production or have gone out of business” inside of 10 years.
“In the U.S. freight railcar market, the potential for disruption and loss to the U.S. economy may be even more acute than in Australia, especially given the larger size of U.S. freight railcar demand,” the report said. The analysis projects a loss of up to $6.5 billion in U.S. gross domestic product.
Historically, Chinese rail projects in the U.S. have focused on U.S. government-funded passenger rail. As stated in the “Buy America” legislation, foreign companies that are granted contracts for government-backed rail projects are required to use, at least in part, U.S. materials and also build U.S. production plants, says the report.
“Buy America does not apply to all U.S. rail projects, and the U.S. freight-manufacturing industry is particularly vulnerable, as it does not enjoy Buy America’s protections,” according to analyst Michelle Ker from the U.S.-China Economic and Security Review Commission.
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