I have a sort of accounting question--it concerns China's export
dependence. Below are numbers from the Asian Development Bank on
contributions to Chinese growth.
There has clearly been a tremendous increase in net exports—it is now as
large as private consumption. But, I believe that looking only at the
number for net exports seriously understates the export
orientation/dependence of the economy for two main reasons. First, a
major, majority part of investment is related to export
production--infrastructure for industrial parks or actual factory
building. Thus, without the exports there would not be so much
investment activity.
Second--and here is the area I would like to hear comments about--I do
not believe that net exports itself is a satisfactory indicator of the
export contribution to Chinese growth. Here is my thinking--suppose
that a huge percentage of Chinese workers are involved in producing
exports. And also suppose that China imports all the components for its
exports and that labor costs are almost zero. In the national
accountings, net exports would be almost zero. Yet, if China stopped
exporting there would be a great decline in employment and economic
activity. To correct for this, doesnt it make sense to divide imports
into those that are used in export production and those that are
not--and to redefine net exports as exports minus those imports that are
not used in export production. This recalculated net would better
reflect the role of exports. Since a large share of China's imports
are parts and components used in export production such a recalculation
would lead to a greatly increased export contribution.
Does this make sense?
Marty
GDP
Net exports
Investment
Government consumption
Private consumption
2003
10.0
0.1
6.3
0.9
2.7
2004
10.1
0.6
5.7
1.1
2.7
2005
10.4
2.6
3.9
1.2
2.8
2006
11.1
2.3
4.6
1.5
2.7
2007
11.4
2.7
4.2
1.8
2.7
/Sources/: National Bureau of Statistics; staff estimates.
/Asian Development Outlook 2008/
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