[Marxism] China and Exports

["S. Artesian" <sartesian@xxxxxxxxxxxxx>]

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 
debt instruments.

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 
capitalism

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 
consumption.

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 
pessimistic conclusion.

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 
sector.

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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