"Made In China" Is Far From Being Taken Over By The United States.

China's trade surplus rose to $31 billion 500 million in July, the highest level since January 2009.

This could trigger a new round of hysterical complaints about the unfair undervaluation of the renminbi.

But before making such a big deal, politicians in the United States should consider the findings of a recent study by the Federal Reserve Bank of San Francisco.

Senior economist at the Federal Reserve Bank of San Francisco

After analyzing the survey data of Commerce Department, Bureau of Labor Statistics and the Census Bureau (Census Bureau), they found that 88.5% of the goods and services consumed by American households were produced in the United States.

In the remaining 11.5% of the imports, the proportion of manufactured goods in China is barely more than 1/4, that is to say, it accounts for only 2.7% of the total consumption expenditure in the United States.

Even the above data also exaggerate China's exports to the US in the US.

In this regard, Haier and Hopkin explained:

Obviously, if a pair of sports shoes made in China sells for us $70 in the US, the US $70 will not all belong to Chinese manufacturers.

In fact, most of the retail price will be used to pay for the pportation of shoes to the United States, the rental of sports shoes retail stores, dividends to American retailers and the marketing cost of sports shoes.

These costs include salaries, wages and benefits paid to us workers and managers involved in this process.

The calculation of the Federal Reserve Bank of San Francisco found that on average, 36% of the import price went to the pockets of American businesses and workers.

The proportion of imports from China is even higher.

Haier and Hopkin wrote:

The problem is even more complicated now.

American households spend 88.5% of their total spending on goods made in the United States, but they also contain "made in China".

Taking all these into account, Haier and Hopkin concluded that the total share of "made in China" goods in US household consumption is only 1.9%.

What do these numbers really mean?

The answer is: mixed emotions.

The good news is that the Chinese threat theory, which is so terrible in the political debate in the United States, is exaggerated.

The proportion of China's exports in the total consumption of the United States may be increasing rapidly, but relatively small as a whole.

American employees and enterprises have also made considerable profits from China's exports.

The worry is that some people believe that the appreciation of the renminbi can create more space for US manufacturers to sell their products in the US market.

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From an economic point of view, one advantage of this situation is that "made in China" occupies a relatively small proportion, which means that inflation in China has limited impact on pushing up US commodity prices.

Haier and Hopkin concluded:

China's 2011

The US may not be able to force China to reassess the renminbi, but they can at least avoid it.