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Strategies & Market Trends : Greater China Stocks
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From: Julius Wong8/10/2011 11:49:19 PM
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‘Made in China’ Taking Over U.S.? Not By a Long Shot



A rebound in China’s trade surplus to $31 billion in July – the highest level since January 2009 – seems likely to spark a new round of hand-wringing on the iniquities of an undervalued yuan. But before climbing on their soap box, politicians in the U.S. should consider the findings of new research from the Federal Reserve Bank of San Francisco.

According to San Francisco Fed senior economist Galina Hale and research advisor Bart Hobijn, the share of Chinese produced goods in U.S. consumption is not nearly as high as is widely believed.

Surveying data from the Commerce Department, Bureau of Labor Statistics and the Census Bureau, the pair finds that a full 88.5% of goods and services consumed by U.S. households is produced domestically. Of the 11.5% that is imported, goods made in China account for barely more than a quarter — or 2.7% of total U.S. consumption spending.

Even that overstates the true share of China’s imports. The reason? Almost all consumer goods are the product of many hands, and properly accounting for what is made where further reduces the share of “made in China.”

...

It gets more complicated. Chinese made parts also go into the 88.5% of U.S. consumption spending devoted to goods made in the U.S. Adding it all up, the researchers conclude that the total share of “made in China” goods in U.S. household consumption is just 1.9%.

blogs.wsj.com
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