[Marxism] China's downturn
sartesian at earthlink.net
Sun Apr 19 22:49:12 MDT 2009
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
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,
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.
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