Industrial Maintenance and Plant Operation editor Joel Hans recently interviewed Josh Green, CEO of Panjiva, to discuss the "ongoing tale of China’s yuan, the global pressure to allow the currency to rise in value, and what affect that might have on U.S. manufacturing." Unfortunately, Green doesn't have the full picture of the China problem.  He was queried about AAM's recent report of 2.4 million jobs lost due to the trade deficit with China, and was asked if he thought there was "any validity to this number." Green's response:

"There are people who argue that American manufacturers can’t compete with Chinese manufacturers because of China’s currency policy. In my opinion, people who make that argument are half right. They are correct that American manufacturers can’t compete with Chinese manufacturers, but it’s not because of currency policy. The wage rates in China are so much lower than they are in the U.S., that even if there was significant change in Chinese currency, American manufacturers would still be in a position of being uncompetitive."

Sorry, Mr. Green.  You're missing the bigger picture.  What makes China such a huge juggernaut is not simply low-wage labor. There's also dumping, subsidies, currency manipulation, and weak enforcement of environmental standards. Take the steel industry as just one example:  When we hear about the "China Price" for China’s steel juggernaut, China’s cost advantage does not simply stem from low labor costs.  Chinese companies produce steel on average 20-25% cheaper than U.S. or European companies.  Labor accounts for less than 10% of the costs of producing Chinese steel.  What's actually involved are MASSIVE energy and natural resources subsidies. The Chinese steel industry also has no advantage in supply chain proximity.  Most “Freight In” for steel consists of raw materials, iron ore, thermal coal and coking coal.  China possesses large quantities of poor-quality coal which requires substantial additional processing for steel, thus increasing costs.  Indeed, the rise of Chinese steel has less to do with production costs and more to do with a deliberate governmental strategy involving tens of billions of dollars in subsidies.  In fact, energy subsidies for Chinese steel amounted to at least $27 billion from 2000-2007, according to one study. Mr. Green, you need to learn a thing or two about world trade.