[Marxism] China's downturn

[S. Artesian]

More on this:

A really interesting study from the Hong Kong Monetary Authority studies 
China's export contributions and concludes that China is less export 
DEPENDENT than it appears because, in essence, so much of China's export 
activity is based on importing and re-exporting.

Those who can remember that far back will recall Marvin and I arguing about 
this, with my position similar to that of the HKMA paper.  That paper states 
[reviewing, briefly the history] :

It quickly came to the attention of the top Chinese leaders that China could 
learn from the export-led growth strategy of the four“small dragons” of Hong 
Kong, Korea, Singapore and Taiwan. To achieve this goal, the authorities 
launched a series of foreign trade reforms and promulgated apackage of 
preferential policies to foreign invested enterprises (FIEs). They relaxed 
controls on imports and encouraged exports by reducing tariff as well as 
non-tariff barriers, reforming the exchange rate system and broadening the 
scope of exports licenses and quotas.

Four SEZs were created in the southeast coast, aiming mainly at developing 
processing export. To exploit and capture overseas markets, China also 
endeavoured to attract FDI but required the FIEs to sell a significant 
portion of their products in overseas markets. In other words, in the first 
phase of foreign trade reform, there was a conscious effort by the 
government to shield domestic firms and markets from SEZs and FIEs. 
Overtime, however, processing trade and FIEs penetrated areas other than the 
SEZs. Processing trade [processing of imports for re-export] grew to account 
for a half of China’s total trade in the 1990s, and 60% of total trade in 
2006 was attributable to FIEs.

From:  HOW DEPENDENT IS THE CHINESE ECONOMY ON EXPORTS AND IN WHAT SENSE HAS 
ITS GROWTH BEEN EXPORT-LED?
Prepared by Dong He and Wenlang Zhang Research Department

The paper, available for download on the HKMA website, goes on to state:

As a first step, it is useful to note that the share of exports in the total 
demand for gross output in China (i.e., the proportion of gross output that 
is exported to foreign economies rather than sold domestically), while 
larger than in the U.S., was smaller than in Japan and significantly smaller 
than in the neighbouring economies such as Korea, Taiwan and Singapore 
(Tables 1 and 2).

There is also substantial variation in the shares of exports across 
different sectors.

Thus while exports only accounted for a small share in the total demand for 
gross output produced in the United States as a whole, 30% of the gross 
output produced in the computer and electronics sector were exported. In 
China, only the textile and the machinery industries rely to a significant 
extent on foreign markets to sell their products.

__________

In essence the authors are arguing that since so much of China's exports 
work, export industry, is a "snap-on" and assembly of imported inputs, the 
economy as a whole is not as export dependent as Korea, Singapore, Taiwan, 
etc.

Indeed that is certainly the case, and in that regard we can say China, by 
virture perhaps of its relative lack of development, its own inability to 
provide inputs to its export process, is less export dependent, but that 
does not account for the critical role the export sector plays in the social 
reorganization of the country, in the movement of workers away from the 
villages and to industry, to the movement of young women away from home and 
into factory production, and to dis-integration of the social institutions 
of party, trade union, and state..   The argument is hardly an argument for 
the economic strength in the face of global capitalist downturn, or an 
insularity from that downturn, as the thousands of factory closings and 
layoffs in the Guangdong have shown.