China’s Stunted Growth

Looks like the world has been giving China a little too much credit when it comes to exports. Though the value of China’s exports has been rising against their GDP, China actually imports many of the components of their exports. China just adds the finishing touches. When the ratio of exports to GDP is recalculated to include only the value of exports that China itself adds, the ratio remains fairly stable over the last few years.

So what does this mean?

1. China is not as vulnerable to an American economic recession as we’d all like to think.

2. China’s production has shifted to exports of higher value (like electronics) in the last few years (though they still only add roughly the same value, the products themselves are worth more now).

~ by djstrouse on January 6, 2008.