[Marxism] China and Exports
sartesian at earthlink.net
Thu Apr 16 17:25:08 MDT 2009
More than once, participants on the list have debated the role of China in
the global economy, the meaning of the trade imbalances between the US and
China, the significance of China's foreign reserves and holdings of US govt
My positions in these discussions has been that the imbalances do not now,
nor in the future, involve, create, indicate, follow any significant shift
of power, economic gravity to China; that the reserves and investment of the
reserves similarly represents a parking of resources and not an increasein
the "sovereign" power of the government of China or the US or international
Anyway, interesting article-- IMO really interesting article-- in today's
Financial Times, "Jury still out on China's export dependence."
The article states:
"Although China's headline export figures are huge, some researchers believe
this greatly exaggerates the importance of the sector, because many export
factories only assemble parts manufactured elsewhere.
One of the most striking examples is Apple's iPod. A research paper
published last year by economists from the University of California at
Berkeley and Irivine mapped the economic value-added from making iPods.
Although the product left a Chinese factory with a price of $150 they
estimated that only 5 per cent of that value was created in China because
important components were imported. Moreover, Chinese workers received only
2 per cent of the wages paid during the product's manufacture.
'The value added to the product through assembly in China is probably a few
dollars at most,' conclude Greg Linden, Jason Dedrick and Kenneth Kraemer."
The article continues to examine the "spillover effects" from exports:
"The most recent attempt to calculate the importance of exports provided
some dramatic conclusions. Li Cui and two colleagues at the Hong Kong
Monetary Authority used data from provincial governments to try to calculate
the 'spillover effects' from exports into investment in factories, jobs, and
They found exports were responsible for a large chunk of job growth and
investment in recent years. They concluded that for every 10 percentage
point decline in export growth, GDP growth would fall 2.5 points.
Given that exports have gone from expanding at 20 percent in the third
quarter of 2008 to declining by 20 per cent so far this year, this is a
The economic impact of weak exports is 'much larger than what would have
been expected if only the direct impact of exports is considered.'
Nothing surprising in that last bit, about the magnified impact of exports
on a relatively undeveloped country with a huge, and backward, agricultural
Rather than China replacing the US as the center of capitalism, China finds
itself in the position of being the world's largest maquilladora.
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