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iPhone increases US-China trade deficit by $2 billion

iPhone ChinaAccording to a report by a pair of economists out of the Asian Development Bank Institute, the success of Apple's iPhone plays a major role in contributing to the USA's trade deficit with China. The Wall Street Journal (login required) explains that while sales of the iPhone show around a $2 billion trade surplus with China on paper as of 2009, the actual figure is a lot less because the iPhone is only assembled in China, not designed there. While the wholesale price of an iPhone is $178.96, the value of the only truly "Chinese" part is assembly, valued at $6.50 per unit. But because the iPhone ships from inside China, the entire value gets added into the trade figures, thus showing the $2 billion trade surplus. If the numbers actually accounted for the true value coming out of China, the surplus for 2009 would have been about $73 million instead -- meaning that, in reality, there is an almost $2 billion trade deficit just from the iPhone alone.

The report goes on to say that there are many variables at play when looking for the true trade deficit numbers, and lawmakers shouldn't make any trade rules based on such potentially incomplete data. With Apple sales on the rise and its net income following suit, and with Foxconn recently hiring 400,000 workers for its new plants in China, no one is saying that the trade figures between the two countries aren't vital to the economies of both.

[via Business Insider]



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According to a report by a pair of economists out of the Asian Development Bank Institute, the success of Apple's iPhone plays a major role...
 

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Johnexo

Getting consumers in the US to let go of their money is actually counterproductive if it adds to the trade deficit. For the same reason, economists who use Walmart sales as an indicator of US economic health are making a sad mistake. The correlation is negative, not positive.
http://www.prime-targeting.com/us-china-trade-imbalance/

January 28 2011 at 12:45 AM Report abuse rate up rate down Reply
tbone4346

America is the only super power I know that exports it's intellectual property to China and then whines about it being stolen. Invest in America or have your children get used to being China's indentured servant.

January 21 2011 at 9:17 AM Report abuse rate up rate down Reply
marrianjh

China and USA'S people are liking iphone this new deal with them.Actually the main thing of this makeover is that which trade deficit numbers has provide for them.. It was good sign to unconventional trade.
http://www.experts123.com/users/20891/mariaantonietta

January 17 2011 at 12:26 AM Report abuse rate up rate down Reply
bohdanz

The one thing I've never understood about Apple - why don't you manufacture their product here, in addition to boasting that it's 'designed in California.'

They'd add to our economy.

They'd have more control over the leaks that drives them crazy.

Be more AMERICAN.

January 16 2011 at 4:32 PM Report abuse rate up rate down Reply
2 replies to bohdanz's comment
bkenney

Apple is being very American by doing whatever it takes to increase their margins/profitability. Apple works for their shareholders best interest, not America's best interest. If you want to take advantage of this, just buy their stock.

January 16 2011 at 5:17 PM Report abuse rate up rate down Reply
GlennAC

I agree with nebs, it is not in Apple's best interest to manufacture here in the US. Products could not be made with as much profit margin as they can be in China.

As others have stated, worker cost would sky-rocket and product prices would rise dramatically if they moved manufacturing to the US.

January 16 2011 at 9:18 PM Report abuse rate up rate down Reply
GlennAC

"lower price. fast shippment . higher quality"...from China I presume.

January 16 2011 at 3:10 PM Report abuse rate up rate down Reply
Josh

You know it's not so much the labor costs (which don't even take to account the relative health costs on the workers to produce technology @ that scale) but even an environmental one.

You think making all those beautiful retina displays isn't hurting the ecosystem? The toxic waste has to go somewhere - it's good a thing for us China doesn't care or we wouldn't have $299 iPhone 4's.

January 16 2011 at 12:37 PM Report abuse rate up rate down Reply
tbone4346

The irony here is the Foxconn employees I know we exploit, view their situation as "indentured servitude." And point to the fact that the United States fought it's bloodiest Civil War to end such cruelty and injustice.You don't read their perspective here because when you work in a brutally sadistic Communist regime of child slavery, that jails Nobel Peace prize winners. Freedom of speach to post is against the law. So go back to sleep America. Your government has everything under control. Go back to watching your American Idols. Your children are entitled to all the cheap, toxic products they can consume

January 16 2011 at 10:44 AM Report abuse rate up rate down Reply
KarlW

Isn't that exactly what they said above?

"the actual figure is a lot less because the iPhone is only assembled in China, not designed there. While the wholesale price of an iPhone is $178.96, the value of the only truly "Chinese" part is assembly, valued at $6.50 per unit. But because the iPhone ships from inside China, the entire value gets added into the trade figures..."

January 16 2011 at 9:46 AM Report abuse rate up rate down Reply
TowerTone

Alex
I think Brian was alluding to spoilt Americans not wanting to work for the wages that an assembly line would pay, which, as an American, I should find offensive, but as an adult, I find humorous....

January 16 2011 at 9:45 AM Report abuse rate up rate down Reply
Zactu

These stories are killing two birds with one stone: anti-China talk (which is popular) and anti-Apple talk. Apple has been a success recently taking the thunder from other mega-corporations such as Microsoft and that makes Apple a target for negative PR. Where is the publicity on this for Microsoft? Many thousands do coding work for Microsoft Windows and other software in China and India and not to mention millions of units of Microsoft hardware being made in China as well. These mega-corporations like Microsoft and their sheep-like followers are feeding these stories out. It is part of the war in the world of commerce.

January 15 2011 at 7:54 PM Report abuse rate up rate down Reply
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