[Sorry to seem dumb here, but do I call you Yiwu or Zhang? Pending correction of my manners, I'll use Yiwu]
Well, Yiwu, I'd say that the same question applies in both directions. The importing company's profits are included in our GDP figures, aren't they? The same would be true for the exporting nation. And if GDP can be considered to be (total sales) - (imports) then the cost of the import item would be the amount considered, right? Both here and in China?
The problem is outflow of currency (man, lets not get into THAT discussion again!) from one country to another, and the effect it has on the wealth remaining in the country. It is of no matter to the exporter what an item sells for in another country, and the importer could care less whether the exporter makes a profit or not. All that matters is the total amount of domestic expense (product) involved in the transfer. If the exports don't cover costs, the shipper has a problem; conversely, if the import can't be sold at a profit, the buyer has a problem.
So, to answer your question more directly, China can do what the US does to handle imports -- take money from its own M1 supply and ship it to the exporting country. Like I said, I don't really understand this too well, and I stand to be corrected.
jim |
