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What Made in China mean?

Thanks to our Friend Rafa from EU SME.

The Federal Reserve Bank of San Francisco (FRBSF) dedicates its last economic letter (Jan 7) to calculate how much money of expenditures on things made in China stays in U.S. or stay in China.

I’ve produced for my own entertainment hundreds of very accurate examples of the same over the years which I keep in my files, ranging from Levis 501 to Reebok shirts, to Arcoroc dinnerware or Electrolux home appliances to name a few. In all cases I can calculate what part of the price stays in China –
and what is for the home country of the brand.

The FRBSF calculation is an average, and it illustrates Nike brand as an example. I have even more shocking examples. In average, from all the expenditures made by USA on things made in China, the reality is that 56% of such expenditure stays in the U.S.

However, of the expenditures made by USA on things made in the EU, only 18% stays in the U.S. Actually, the study notices one thing, in my opinion should have noticed it before, that the apparent China gains is just seize what other countries or economic areas have abandoned, e.g. the low-end manufacturing that Japan quit decades ago. In short, all these simplistic analysis on deficits and surpluses we can read on headlines is quite naive, too narrow and short-sighted for complex supply chains and an entangled world.

The FRBSF newsletters are quite funny in general, along with complex analysis of bond market returns you can find another report on why opioids delay return of workers to work

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