On the other hand, most of the export value and the deficit due to the iPhone are attributed to imported parts and components from the third countries and have nothing to do with China. Chinese workers simply put all these parts and components together and contributed only $6.50 to each iPhone, about 3.6% of the total manufacturing cost (e.g. the shipping price). The traditional way of measuring trade credits all $178.98 to China when an iPhone is shipped to the US, thus exaggerating the export volume as well as the imbalance. Decomposing the value added along the value chain of the iPhone manufacturing suggest that, of the $2.0 billion iPhone export from China, 96.4% is actually the transfer from Germany ($326 million), Japan ($670 million), Korea($259 million), the US ($108 million) and others ($ 542 million). All of these countries are involved in the iPhone production chain."
Read the whole article by Yuqing Xing at vox.eu here: How the iPhone widens the US trade deficit with China
9 comments:
HI Tom
So we or more the Federal Reserve provide open credit swap lines to hold fast the Euro dollar even though they have had more debt defaults than we do with their austerity maastriction so to speak.
We provided TARP monies and a purposefully sofetened dollar so that banks around the world would not pop as everyone ran to the U$D in 2008.
We are underwriting Germany export performance for the purpose of cutting out our manufacturing base.
It's not only that jobs and factories are shipped to China, it's the subsidization of the Euro and also it is the purposeful weakening of the dollar not attributable to our debt since European debt is more apparent than ours.
The usa multinationals coke pepsi levis xerox enjoy getting paid in euros but not us.
This is cross platform unpartisan
Just how many times did the USA by means of the IMF bail out Korea after their government stole the money of the government
just so that they can make cheap memory for computers and cut the prices of AMD
then GE gets a bailout and doesn't pay taxes
I think that creative destruction would have been good for something right ?
I think that as far as the US ruling elite are concerned, this is just maintenance — maintaining the American Empire, which they control. It is global economic hegemony, and military hegemony to back it up. Soft power and hard power.
soft power and hard power
followed up with a case of a rotting core of industries.
why not spike the USD ?
what effect would that have besides making it unprofitable to export and getting paid in foreign currencies ?
when I went to Argentina in 2004 I could get local beverages very cheap along with real estate due to bubble collapse 2001/2002
when I went back in 2008, all the local beverage companies were up against pepsi and coke and unilever products which all demanded an international price. real estate followed too with international prices. cars are also. some of this occurred due to international buyouts of local products then swapped out for big prices.
The USD is down due to low rates and lax monetary and fiscal policy owing to the housing crisis. Housing is going into a double dip, so expect the USD to stay low for some time unless there inflationary expectations also grow. Then the Fed will hike. However, inflationary expectation will not be due to demand-pull inflation but cost-push, so raising rates will be of little use. Raising rate is not going to produce more oil or food. With oil and food rising, the vise is tightening.
Thanks for a really interesting piece, Tom. This is the kind of reality piece we need to put the trade deficit in perspective.
when should we expect rates to hike if there is a double dip in housing ?
The Fed is caught in a dilemma. On one hand, if mortgage rates rise, the housing crisis worsens and the position of the big banks with it. On the other hand, rising inflation expectations would force the Fed to hike.
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No doubt that many are getting madness on the iPhone products. Even me, I am getting update about the release of the features and new concepts of the iPhone. I really enjoy the using the iPhone and I am comfortable with it.
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