A new study released by the Federal Reserve Bank of San Francisco shows that when Americans buy products labeled "Made in China" 55 cents on the dollar goes to people in the United States.
Go to a Tea Party rally, Republican convention, or a meeting for any of the various manufacturing unions in the United States and you are sure to find someone banging the drum for the 'buy American' parade. "Don't buy from China," they say. "It hurts Americans."
The truth, however, is that buying from China actually benefits Americans more than the Chinese.
According to a study by the Federal Reserve Bank of San Francisco, a majority of the cost of products labeled 'Made in China' goes to people and businesses in the United States.
The study shows that 55% of the cost of the product goes to services provided in the United States like transportation, rent, salaries of salespeople, profits for shareholders, and marketing of the product.
The study also shows that the percentage of the cost that goes to Americans is higher for imports from China than from other nations. The average take for Americans from imports from other nations is 36 cents on the dollar, compared to 55 cents when the product is from China.
In other words, buying from China is actually better for Americans than buying from other countries.
The researches concluded that this is due to the types of products that are imported from China.
“The fact that the U.S. content of Chinese goods is much higher than for imports as a whole is mainly due to higher retail and wholesale margins on consumer electronics and clothing than on most other goods and services,” write Bart Hobijn and Galina Hale in the study.