You know why China is an export economy? It's not because the domestic market doesn't exist (it exists, and is growing massively).
It's because their Government ENCOURAGES exports! Imagine that! And they do it through that evil capitalistic means: economic incentive.
Most of China's taxes come from a B2B tax, like a VAT. If Two Chinese companies transact, there is a 17% tax on that transaction.
However, if a Chinese company sells to a foreign company (say, US or EU), then there is only a 6% tax on the transaction!
China has set its taxation laws to ENCOURAGE production and export of goods. You save 11% right off the top by exporting, rather than selling internally.
It's one of the reasons you can buy a 36" picture tube TV here for $100 (I kid you not; I was looking at one yesterday in the local Suning store for 699 RMB), but a 27" flat screen will run you $400 (2799 RMB). If you can export the product, you darn well do it because you get an extra 11% return on that export!
Only when you cannot reasonably export products do you sell internally and take the higher tax hit...
And it always freaks people out when the latest consumer products are 4X more expensive in China than in the US; no one wants to sell the new stuff here because you can get 11% more money selling it overseas.
Yeah, I have never been there, but I watch a few finacial shows produced in HK and Sing. They often talk about the prices of goods, services and realestate in China coastal as opposed to inland and explain why.