Roger Yu

USA TODAY

When President Trump meets with Chinese President Xi Jinping this week, he will remind his guest that China runs the largest trade surplus with the United States, and that persistent pattern has led to the mass exodus of American jobs in the last decade.

U.S. industries from textiles and electronics to agriculture and construction equipment have flocked to China in recent years, partnering with factories that hire low-cost workers and operate under lax environmental and labor practice standards.

The U.S. shipped $116 billion of goods to China in 2016, making it the third largest export market after Canada and Mexico, according to the Department of Commerce. But that figure pales compared to the $463 billion in imports from China. The result is a U.S. trade deficit of $347 billion, the largest of any U.S. trading partner.

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Yet it is not all one-sided from China's standpoint. China has used its trading surplus to create a massive manufacturing sector that has pulled hundreds of millions of Chinese from poverty and made them consumers who increasingly are interested in American goods and services. In addition, China is among the most aggressive foreign investors worldwide.

Here are key issues involved when the two leaders discuss their trade relationship:

JOBS, JOBS, JOBS

Trump complains that U.S. companies’ eager migration of manufacturing to cheap-labor Chinese factories — where wages average about 80% less than in the U.S. — has cost too many American jobs.

Trade skeptics say the numbers back him up. The U.S. has lost 3.4 million jobs between 2001 and 2015 due to the trade deficit with China, and about three-fourths were in manufacturing, according to Robert Scott, an economist at the liberal think tank Economic Policy Institute. Incomes of workers directly impacted fell by $37 billion a year between 2001 and 2011, Scott said.

Others say advances in manufacturing are mainly to blame. A study by Ball State University found about 88% of manufacturing job losses between 2000 and 2010 was due to factories running more efficiently, including automation.

TRADE BARRIERS

China creates obstacles that make it difficult for U.S. companies to operate and sell there. Most foreigners wishing to open a business there must contract with a Chinese partner. Meat and other agricultural products are severely restricted. Cumbersome certification and labeling regulations are required for many industries.

U.S. exports to China have “a very small share of China’s overall market ... (and) should be even bigger,” the U.S.-China Business Council said in a recent report. U.S. goods accounted for 6.5% of China’s total imports in 2015, trailing the European Union and South Korea, it said. The U.S. share was down from 10% of Chinese imports in 2000.

Trump said he would address the imbalance through direct negotiations with China rather than through multi-nation deals or the World Trade Organization. “We cannot continue to trade (with China) if we are going to have an unfair deal like we have right now,” Trump said in a Financial Times interview published Sunday.

CURRENCY

Trump accuses China of keeping its currency artificially low so Chinese manufacturers can sell products abroad at lower costs. “When you talk about currency manipulation, when you talk about devaluations, they are world champions,” Trump told the Financial Times. “And our country hasn’t had a clue.”

The Chinese government uses the U.S. dollar as a benchmark to manage its currency, the renminbi, also called the yuan. China’s central bank controls its currency by setting a daily rate for the yuan, pegged to the dollar. The U.S. and other free-market economies let the value of their currencies rise and fall based on global demand.

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The International Monetary Fund has pressured China for years to let the market determine the value of its currency rather than relying on artificial mechanisms. Five years ago, one U.S. dollar bought 6.3 yuans. Today, one dollar currently buys about 6.9 yuans, which makes Chinese imports less expensive in the U.S.

There are signs that the Chinese government is finally listening to calls for a fairly valued currency, even if it means taking steps to prevent it from falling too sharply against a strengthening U.S. dollar.

“For the past two years, the Peoples’ Bank of China (China’s central bank) has, in fact, been intervening in currency markets to prevent the renminbi from falling too sharply in value against the dollar,” Eswar Prasad, an economics professor at Cornell University, said in December. “China has, if anything, been doing the U.S. a favor by not letting the (renminbi) depreciate as much and as fast against the dollar as the markets seem to want.”

Follow USA TODAY reporter Roger Yu on Twitter @ByRogerYu.