ICYMI: "Places that were China shock losers are Bidenomics winners"

Under President Biden and Vice President Harris, businesses are investing in American manufacturing again—creating good-paying union jobs, particularly in communities that were left behind by trickle-down economics and past trade deals. That's no accident. Biden-Harris investments are targeted at communities that the last administration failed to help. Congressional Republicans are trying to repeal those investments, which would outsource jobs to China and hurt their own constituents.

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Axios: Places that were China shock losers are Bidenomics winners
[Neil Irwin, 8/29/24]

Look at a place that suffered intensively from industrial decline earlier this century as imports from China displaced parts of U.S. manufacturing, and you're likely to find somewhere that's disproportionately benefiting from the wave of investments now underway.

Why it matters: That's exactly the outcome the Biden administration intended to achieve with the Inflation Reduction Act, Bipartisan Infrastructure Law, and CHIPS and Science Act, which together are meant to ultimately trigger trillions in investment.

The big picture: Jobs lost decades ago in sectors like furniture and textile manufacturing probably aren't coming back. But the locations that experienced those losses are poised for a boost from investment initiatives around infrastructure, green technology and semiconductors.

• That's the implication of a new paper from Glencora Haskins, Mark Muro, and Maya Garg of the Brookings Institution.

By the numbers: Some 30% of the investment announced in "strategic sectors" since 2021 has gone toward the places most affected by trade shocks. Those areas were identified in earlier, seminal work quantifying the impact of China's expanded role in the global economy.

• $222 billion in total private-sector investment has been spread across 117 projects in 72 of the most trade-affected counties.
• "[T]he communities most adversely impacted by the China shock of the 2000s are indeed receiving private strategic sector investment at a rate that vastly outpaces their share of total economic output and population," concludes the paper.

For example, Randolph County, North Carolina, was hit hard by the disappearance of furniture and textile manufacturing in the early 2000s, and is now seeing investment from Toyota, Fujifilm, Wolfspeed and others.

The intrigue: The existence of the correlation doesn't answer the question of "why." Private sector investors may be choosing these places for the same reason the manufacturers of the past did, like the presence of energy and transportation infrastructure.

• There has also been a thumb on the scales from the administration, which has made supporting distressed regions an explicit goal of the policies.
• Bidenomics investments are designed, White House economic adviser Lael Brainard said in January, to reach "communities that were previously left behind."

Of note: The Biden administration has cast its policies as designed to prevent the original disruptions from Chinese trade — the China shock 1.0 — from giving way to version 2.0 as China invests in manufacturing solar cells, electric cars, microchips and other advanced products.

• "'Place-based' industrial policy has both worked to repair past damage and fortify regions against potential future threats," Muro, a senior fellow at Brookings, tells Axios.

The bottom line: As Muro says, "private-sector trends have certainly driven major shifts in the geography of investment, but the Biden administration has sent very strong signals all along, both verbally and with major funding choices and incentives."