Chinese Exports Are Everyone's | Daniel J. Ikenson and Alec van Gelder | Cato Institute: Commentary

Chinese Exports Are Everyone's | Daniel J. Ikenson and Alec van Gelder | Cato Institute: Commentary: "Global economics is no longer a competition between 'us and them,' between 'our' producers and 'their' producers. Instead, because of cross-border investment and transnational production and supply chains, the factory has broken down its walls and now spans borders and oceans. Competition is often between international brands or production and supply chains that defy national identity.

So what does all of this have to do with China's status as the world's biggest exporter?

The vast majority of Chinese exports are hugely dependent on imports from the rest of the world: iron ore from Australia; microchips from Taiwan, South Korea or Singapore; software from teams in Redmond (in the state of Washington) and Bangalore (India); new designs from Cambridge (whether Massachusetts or England) and Toulouse (France); investments raised from consortiums based in New York City, S�o Paulo or Johannesburg.

China has become the world's largest exporter primarily because of the global division of labor that has helped reduce poverty and create wealth: China provides lower-value-added production. The components of Apple's iPods and iPhones are put together in China, but their designers in California are worth more to the company's bottom line. Denmark's Ecco has shoe factories across Asia, but its most valuable footwear is still designed and manufactured in Europe, where the quality is guaranteed and the workforce highly trained – and higher paid."

"simple trade accounting rules attribute the entire value of those exports to China, even when the Chinese value embedded in those goods accounts for a small fraction of the total.

That accounting method helps explain why China's exports have surged over the decades, as the division of labor evolved and manufacturing chains proliferated."

"the Chinese-added value embedded in a 30G Apple iPod accounts for only $4 of the total $150 cost, yet the entire amount is chalked up as a Chinese export. Other studies estimate overall Chinese value added in all products exported from China to average somewhere between 35 percent and 50 percent, a large proportion but a lot less than gross export figures imply."

Beware the hidden costs of this federal stimulus | Scott Walker for Wisconsin Governor

Beware the hidden costs of this federal stimulus | Scott Walker for Wisconsin Governor