It is pretty clear by now that the collapse of China’s export markets has not derailed the economy, as some feared it might.
Even with a lot of that stimulus cash being stolen or going into property and shares, the Chinese juggernaut rolls on. Exports, as I have maintained all along, created a lot of jobs and helped the coastal regions to develop, but were not key to Chinese GDP.
A perfect illustration of this can be found in the latest report from China’s Customs office. It has come out with a comprehensive list of the top 200 trading companies last year.
Between them, those companies earned $367.53 billion from exporting goods last year, an increase of 21.3pc. In itself, that’s a relatively big amount. Just these 200 companies were responsible for over 8pc of China’s overall GDP of $4.42 trillion.
However, when you look more closely at the list, you see how measuring the contribution of exports to GDP is misleading. Here are the top ten on the list (hat tip China Sourcing Blog)
(Rank, Enterprise, Export Value in USD million):
1 Shenzhen Hongfujin Precision Industry Co., Ltd., 26218
2 Dongguan External Processing & Assembling Service Co., 15514
3 Dagong (Shanghai) Electric Appliance Co., Ltd., 15040
4 Nokia Corporation, 8576
5 Helian Yongshuo Computer (Suzhou) Co., Ltd., 7849
6 Shenzhen Baoan Foreign Economic Development Co., Ltd., 7371
7 Tech-Front (Shanghai) Computer Co., Ltd., 6668
8 Huawei Technologies Co., Ltd., 6531
9 Inventec Science & Technology Co., Ltd., 5989
10 Renbao Information Industry (Kunshan) Co., Ltd., 5232
So we can see that Shenzhen Hongfujin Precision Industry, a subsidiary of the giant Taiwanese firm Foxconn, is the largest exporter in China, making nearly twice as much in sales as its nearest rival. Hongfujin helps make Apple products, as well as a range of precision computer parts and so on.
However, its success has to be put into context. Hongfujin also ranks number three on the importer’s list – (3 Shenzhen Hongfujin Precision Industry Co., Ltd., 21072).
So after stripping out the cost of the parts that Hongfujin imports, you can see that it only actually creates $5.146 billion of value – still a big sum of course, but nothing compared to the headline "exports" figure of over $26 billion.
Strip out the cost of its workers, facilities and so on, and the margin looks even thinner. Strip out the kickbacks to suppliers, bribes to officials and abalone-laden banquets and the margin looks thinner again. It is no wonder that factories were going bust at the end of last year after just the first dip in orders.
Exports created infrastructure, provided jobs, and brought China to the attention of the world. But their role in the overall economy was always limited.