[mbraynard]

So, they import a kilogram of iron, and make it into a box of nails that weighs about as much, considering the value addition on the part of the Chinese as comparatively low (i.e., slave labour), the box of nails would sell for slightly above the price of the raw materials themselves.

They use the "net exports" tag to hide the real value of exports. Make no mistake, China is very dependent on exports.

You just completely contradict yourself. Where did you study economics?

The example you gave demonstrates why China is NOT dependant on exports. Had they sorced the material domestically, then that would demonstrate a greater dependance on exports. Instead, they get it from Australia.

[CarrotAndStick]

I’m not an economist (call me a layman), but from what I know about China’s economy, it thrives on the small profits made in producing finished goods from imported raw material; a model where the value addition is a very tiny percentage of the overall transaction.

Now, the Chinese model is of hundreds and thousands of factories making small profits, and these profits, on aggregation, becomes a significant portion of the economy. This model is extremely dependent on exports.

From the pictures supplied in the article, I can see that government spending and investment form large chunks of the economy. But, aren’t these amounts directly going towards establishing those factories that I mentioned? Can salaries be paid with money set for investment, in as sustainable a manner, as the profits from those companies?

If you know better, please tell me why this picture is wrong. Thanks!