Posted on 12/15/2005 9:49:23 PM PST by Lorianne
China trumped the United States in 2004 as the world’s leading exporter of high-tech goods like laptop computers, mobile phones and digital cameras, the Organization for Economic Cooperation and Development said on Monday.
Official data from the Paris-based OECD highlighted how fast the country, still Communist Party-controlled, has emerged as an economic power that the United States and other long-industrialized countries can no longer ignore.
China exported $180 billion worth of ICT (information and communication technology) goods in 2004, compared with U.S. exports of $149 billion, the OECD, a free-market organization whose 30-country membership does not include China, said.
(Excerpt) Read more at msnbc.msn.com ...
It is amazing how many people can't see this.
No offense taken.
While, I did forget about Indonesia (hey, it straddles the equator), I did say "of any major economic value to HK". I do not have the numbers at my fingertips, but I would doubt that the HK to Nigeria trade is in the range of an order of magnitude of HK trade to Japan or US or the Euros.
I did not say the southern hemisphere was of no economic value, I simply referred to major (I could have used signficant, but perhaps preponderance would have been better) economic value to HK. Certainly, we couldn't get by without oil, or diamonds (for industrial purposes) or chromium, etc.
I have heard of Chinese efforts to economically and politically benefit from relationships with African nations and we should be wary. It would be a shame to have worked for so long to limit Fidel's influence to see another Marxist jump into the breach.
Best,
Opocno
,,, as it turned out, technology was handed to China, not it's arse. US corporations have found China's arse and will kiss it as long as there's slave labour there to assemble the latest and greatest "American" products.
that's correct - dash out s. hemisphere - write SE Asia.
Sure. Yes we have. Becuase our elite power-brokers and wealthy investors have focused more on "ownership of intellectual content" rather than than delivery of real goods. They have come to claim as theirs what can not be owned -- ideas -- and left the warehouse doors open to all and the sold the factories for songs. Literally ... for songs!.
WTF? - World Trade Federation?
"Unfortunately, their computer keyboards are equipped with no L but an extra R instead. :-)"
And it takes great phisique to operate it, cause it has 5,000 hierogliphs and is thus 50 feet long.
Now that is a hefty laptop.
Thanks, mate!
How does your argument support the article's position that we "Ignored" China?
By the way, we make more on Chinese high tech shipments than they do. This article is about technology, not plastic toys at Walmart. Or tires, or other heavy industry, that our Unions have made us non-competitive.
Perhaps it would help if you could further elaborate on what you mean by "the value of shipments (and ownership of intellectual content of those shipments)"? I take that to mean you put more value on the "intellectual content" over the raw material, manufacturing, and packaging. IOW, if we can claim the "IP" of aproduct and price that component somehow, that that value overwhelms all the manufacturing aspects. But I am not sure that is what you meant.
To explain - you are using the term IP - which can be broadly or tightly defined. Tightly it might be a patent, broadly it would be the design knowledge/content.
I don't want to spend a day on this - so will give a very brief probably flawed but approx OK explaination.
Lets take an Apple Ipod. They are made in China. Apple designs unit and chips and software. Retail = $300. Best Buy keeps $100. Apple keeps $100. (Maybe more). China assembles $50 in parts with $30 in labor and sells to Apple for $100. This shows up as balance of trade as plus $100 for China. Yet results in China margin $ of about $20. Apple sees ZERO in trade - because the IP was shipped out of the US at no charge - they are just building to the Apple design. Yet Apple has $100 in profit margin.
So for every IPOD, China trade balance grows $100. China profit grows $20. US profit grows $100 (plus retail margin - but I'll drop that). Question - which business would you rather own? Which is more profitable? Yet this business creates huge negative balance of trade for US.
Now sell the same IPOD in Japan. Apple still gets their $100, for Apple Japan subsidiary. China ships $100, but Apple imports and sells in Japan - the Ipod never enters the US - so Apple makes again $100, China makes $20, trade goes China plus $100, US - no trade impact.
Lets make a DVD player (although this market is a bit passe). US designs a chip with $5 IP content on a $1 chip. Sells it into a DVD player for $10. Chip made in China. DVD player made and assembled in China. China makes $5 on the whole DVD player, US chip desinger makes $9 on their content. The $10 chip never comes back into the US, because it never left, as only the design left the US at zero value. The DVD player comes back to the US at $40ish/ China sees $40 in balance of trade, US sees -$40. China profit = $5, US profit = $9. (This is not so silly - if I remember correctly, all the little red diodes that were used for DVD lasers came from one company's IP (somewhere near San Fran) - they were making something like $4/diode for a $0.50/part per DVD player. It might have been a CD recorder, I can't remember.)
So it is a question of who is making money - not who is making balance of trade.
This is a strange new way of looking at trade, which is not accepted by economists in general. However, if you ask most economists to explain trade in the last few years - they would be dumbfounded. Remember - most expected the $ to drop significantly this year - it rose. Most expect that this "balance of trade" can't go on - yet it is 20 + years since first we were frightened with Japan Inc, now China inc. Our market keep going up.
This is approx what is going on in many sectors. So it becomes a question of "Balance of trade" vs "Balance of profit". I do not know the answer. I do know that the original writer of the article hasn't even stopped to consider these efffects.
It could be caused by the "imbalance" in margin in the modern world - traditionally everybody had maybe more similar margins. Now that some parts are so much more valuable than others, and trade is so international, the "balance of trade" thinking may not work correctly.
As for US mfg base, I leave it to others to explain how Honda can make a better car in Ohio than GM can make in Michigan. That is fodder for books, not emails.
I just read this, after trying to explain my post. You hit the nail on the head.
Andy Kessler has written a few articles trying to explain this exact situation - why the balance of trade appears bad, but the balance of profit is good for US.
Now that China and India can are exceeding;y capable of producing the golden eggs on their own -- they will. They are.
Count well those few eggs they are now tossing you -- without external miracles, your and we all together will not have even those much longer.
China is damn determined to do what you claim they are not doing -- for China WILLs to develop high tech systems, and they WILL. See the old fable I mention above.
The original article is about Chinese tech exports.
My explanation, and if you note a few others on this thread as well, point out it is the profit value of the shipments that count, not the $ shipment value.
I also pointed out we have far from avoided paying attention to China.
I bothered to spend time to explain this concept to you.
You responded with a twisted version of "The Goose that Laid the Golden Egg" -
Thanks.
You can understand mine. I'll repeat it. US investor group now current owners gives (licenses) manufacturing technology to China for a key set of high tech products. They shutter the US facilities, some or all shipped to Center-of-World. That's manufacturing capacity -- that's the goose. Killed in the US, reborn in the Center-of-World (China).
But China doesn't just take our goose -- they also fatten it up, they develop their own goose-supporting infrastructure. Engineers, designers, novel Chinese-born ideas using same manufacturing technology. Growing and strengthening.
Our gooses? Dead. Our goose-supporting infrastructure -- obsolete, unwanted, rotting away.
The golden eggs? Those are the products made by the manufacturing capacity -- the goose and the goose-supporting infrastructure. Our US "savvy" investors may claim the few eggs left in the goose when we shipped it to China, but soon enough China can be able to and will claim all eggs as their own.
Then those "savvy" US investors will look like silly gooses and ALL our gooses will be cooked.
Savvy? Simple enough for you?
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