How the 'China Shock' devastated small American communities : Planet Money : The Indicator from Planet Money Trade with China made American goods cheaper and lifted millions of Chinese people out of poverty. At the same time, it devastated communities across America's heartland. What have we learned from the "China Shock"? And what can we do to prevent something like it from happening again?

'The China Shock' and the downsides of globalization

'The China Shock' and the downsides of globalization

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Mark Ralston/AFP via Getty Images
A truck passes by shipping containers at the Port of Los Angeles, after new tariffs on Chinese imports was imposed by President Trump, in Long Beach, California on September 1, 2019. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP via Getty Images)
Mark Ralston/AFP via Getty Images

Almost a decade ago, three economists began a research project to see what happened to American communities after China cannonballed into the global marketplace at the turn of the millennium. Although opening trade with China resulted in cheaper goods for American consumers and helped lift millions of Chinese people out of poverty, the researchers found that it also killed over a million American manufacturing jobs and wreaked havoc on communities across America's heartland. It came to be known as "the China Shock."

The China Shock research opened many economists' eyes to the darkside of trade. It was not a surprise to them that manufacturing jobs evaporated. But it was a surprise that so many ex-manufacturing workers struggled to transition to jobs in different sectors or places. Workers, especially older workers, didn't seem to move, even as their communities spiraled downward. Last month, the economists released a new paper and found that the scars of the China Shock still remain.

Today on the show, what have we learned from the China Shock? Could American leaders have prevented it? And what can we do to prevent something like it from happening again?

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