[WS:] My problem with this argument is that a great deal of "made in china" is excluded by definition from PCE. PCE on the expenditure side is equal to gross value added on the production side in national accounts, and GVA = Output less intermediate consumption. My suspicion is that most "made in China" stuff is counted as intermediate consumption. Suppose that a US firm buys components in China for $10 a piece, packages them and sells them to the US consumers for $100 a piece. The value added by that firm is $90 a piece, all "made in the US" by definition. And of course "value added" equals remuneration of all factors of production on the income side in national accounts, which includes compensation of employees, property income and operating surplus aka profit. If we were to believe a certain German dude, only the first of these factors actually created the value, the other two are parasitic sponging off that value.
I guess the argument makes sense form a macro-economic perspective only because of the super-exploitation of Chinese labor. The stuff "made in china" is so cheap that it hardly counts in the final price i.e. hardly adds any value in the macro economic sense. But if you look at the volume of material products, especially consumer goods, most of the stuff you see is "made in China" - hardly anything is labeled "made in the USA." We would need a very different accounting system than NIPA or SNA to capture that. This of course, does not mean that nothing is made in the USA anymore - there is a great deal of really high quality stuff manufactured here, jet engines, aircraft, missiles, armored vehicles to name a few, but most of this is purchased by government rather than directly by households.
Wojtek