China’s exchange rate may seem distant and abstract from Clark County. But news out of China this week could directly affect thousands of local jobs. Indirectly, it affects almost every American.
More than 7,900 Clark County jobs and $3.1 billion in the local economy are directly tied to imports, exports and international trade. We don’t have data on how much of this trade is directly tied to China, but we do know that China is Washington’s biggest trading partner.
China’s recent decision to allow its yuan currency to fluctuate against the U.S. dollar has been widely heralded as good for our nation’s economy. In the short term, however, some local businesses and many consumers may feel differently.
Even though Cadet Manufacturing builds all of its electric heaters here in Vancouver, for example, it imports many components it uses from China.
Now that China is no longer keeping the yuan so artificially low, Hutch Johnson, chief executive of Cadet, expects the price of those components to rise. Prices have already climbed because of the rising costs of raw materials and Chinese workers’ demands for better pay.
Johnson doesn’t want to pass on higher costs to consumers, and he’s determined not to lay off any of his 106 employees. He faces tough trade-offs.
Shoppers can expect similar trade-offs. Clothes, toys, lawn mowers, tents, eyeglasses — the artificially low yuan made these goods cheaper. When the yuan climbs, prices will follow.
Even though we’ll be paying more, the benefits of China’s policy outweigh the costs.
China’s new policy may inspire some companies that have outsourced to consider moving back home. It will also make it easier for manufacturers still in this country to sell their products directly to China.
Vancouver-based nLight’s 200 Vancouver employees manufacture laser assemblies here for export to China, for example. The rising yuan will help nLight compete against Chinese manufacturers, said CEO Scott Keeney.
Gov. Chris Gregoire sees opportunity to boost Washington exports to Asia by 30 percent, to $600 million, by 2015.
That’s why Cadet’s Johnson is trying to stay upbeat about the prospect of higher prices at his company.
“Over the last 10 years, U.S. manufacturing moved a lot of production into China,” he said. “Now they may be bringing things back.”
An introduction
Before I sign off, let me introduce myself. I’m The Columbian’s new business and features editor.
After Julia Anderson retired as editor of The Columbian’s business section in February, longtime features editor Elisa Williams briefly edited both features and business. Williams joined Oregon Health & Science University’s communications team earlier this month, and I’m returning to the paper to take over her responsibilities.
I left The Columbian a year ago to work at a Portland publication. I’m thrilled to be back.
If you have suggestions, tips or ideas for the Business and Life sections of the paper, I’d love to hear them. Please call or e-mail me, or comment on this column online.
Courtney Sherwood is The Columbian’s business and features editor. Reach her at 360-735-4561 or courtney.sherwood@columbian.com.
