Research by US economists from a think tank shows that the low level of "Chinese content" in China's export products has resulted in exports to developed markets that are not as rewarding for China as expected.
At a seminar on the value added in Chinese exports, held by the Tsinghua-Brookings Research Center last week, Robert Koopman, chief economist of the US International Trade Commission, said that only about 45 percent of China's exports to the US are made in China. In some categories such as computers, Chinese domestic content makes up only around 10 to 25 percent.
In 2006, for example, Chinese exports to the US totaled 201 billion USD. But 113 billion USD of that amount were outsourced from other countries; only 88 billion USD were really "made in China."
Chinese exports are particularly very low "domestic value added" in processing trade. In joint ventures and wholly foreign-owned enterprises, which do more processing trade than Chinese companies, the Chinese content in their exports are below 50 percent and 35 percent respectively.
For products with less processing content, such as textiles, apparel and furniture, Chinese exports are much higher domestic value added. Chinese companies are the major players in this sector. For state-owned enterprises (SOE), for example, 70 percent of their exports are locally produced.
However, Chinese exports to developing markets have high Chinese content. Exports to Russia, for example, are 80 percent domestic value added and exports to Mexico are 60 percent domestic value added. And there are few processing elements in this trade.
In regard to advanced technology products, Chinese products are found to have a much lower average export unit value compared with such products made by the US, Japan or South Korea. Mr. Koopman's team found that microscopes from China were valued at 200 USD a unit; while those from the US were ten times as much.
In effect, Mr. Koopman questions the reasoning behind the US's argument that increasing high-tech imports from China may threaten the comparative advantages of the US on producing more sophisticated products.
"It turns out that a lot of goods going into the United States and Europe are actually coming from countries that have a higher income level and advanced levels of technology: mainly Japan and (South) Korea," he said.
By People's Daily Online
|
Comment
Tell A Friend
Print Format
Save Article