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How does Germany manage to export $110.34B to China? Your arguments seem reasonable, but it seems that the ultimate conclusion is that Germany cannot export any

How does Germany manage to export $110.34B to China? Your arguments seem reasonable, but it seems that the ultimate conclusion is that Germany cannot export anything as China would do it cheaper. Does this situation also apply to other countries like the USA? Is not possible to compete with China anymore?

corty 5y ago
It is possible to compete with China on things that require special knowledge and are rarely needed. "Special knowledge" because China doesn't have the local skills to produce it (yet). "Rarely needed" because China didn't prioritize acquiring said knowledge. Case in point: Germany mostly exports production machinery (rarely needed, last forever, very special knowledge) and luxury automobiles (rarely needed, last quite some time, some special knowledge needed (mostly on how to appear "luxury")). But in general, I firmly believe that western nations with high social, environmental, legal standards cannot compete with China, except in areas where China didn't yet have the chance to catch up for some reason. I think we are going back to a world where most nations know how to produce almost everything, so competition will no longer be on that knowledge but more on the other necessary factors to make production cheaper.
- Haemm0r 5y ago
  If you can't beat the price, you have to innovate constantly (=stay ahead) and sell higher quality to be competitive.
kragen 5y ago
There are many things that Germany and the USA can do more cheaply than China, and those are the things they currently export to China. This can happen because of local skills and knowledge, for example, or because of natural resources such as brines and geothermal energy that are uneconomic to ship overseas for processing, or because of existing capital investments like those in the Richardson Grating Lab in Rochester, New York, or because of favorable regulatory environments like California's prohibition on contractual employer ownership of the work products of employees outside work hours. There's the Ricardian comparative advantage argument: even if, say, China can produce N95 masks more efficiently than the US, the US might still be able to export N95 masks to China, if all the Chinese are so busy producing more profitable products like solar panels and microchips that they don't have time to also produce N95 masks, as manifested by Chinese wages rising too high for N95-mask factories to produce N95 masks at competitive prices. However, this does not seem to be the case at present. If anything, the situation is reversed: there are things Germany imports from China, even though Germany could make them domestically from less inputs, because German wages are higher than Chinese wages.
imtringued 5y ago
The Germans save a lot and they refuse to increase public debt which means some other government has to take on that debt. Germany's ability to export its products is actually just its ability to export debts which is only a matter of how far you are willing to go vs your competitors. If everyone followed this strategy there would be no world economy.

corty 5y ago

It is possible to compete with China on things that require special knowledge and are rarely needed. "Special knowledge" because China doesn't have the local skills to produce it (yet). "Rarely needed" because China didn't prioritize acquiring said knowledge. Case in point: Germany mostly exports production machinery (rarely needed, last forever, very special knowledge) and luxury automobiles (rarely needed, last quite some time, some special knowledge needed (mostly on how to appear "luxury")). But in general, I firmly believe that western nations with high social, environmental, legal standards cannot compete with China, except in areas where China didn't yet have the chance to catch up for some reason. I think we are going back to a world where most nations know how to produce almost everything, so competition will no longer be on that knowledge but more on the other necessary factors to make production cheaper.

Haemm0r 5y ago
If you can't beat the price, you have to innovate constantly (=stay ahead) and sell higher quality to be competitive.

kragen 5y ago

There are many things that Germany and the USA can do more cheaply than China, and those are the things they currently export to China. This can happen because of local skills and knowledge, for example, or because of natural resources such as brines and geothermal energy that are uneconomic to ship overseas for processing, or because of existing capital investments like those in the Richardson Grating Lab in Rochester, New York, or because of favorable regulatory environments like California's prohibition on contractual employer ownership of the work products of employees outside work hours. There's the Ricardian comparative advantage argument: even if, say, China can produce N95 masks more efficiently than the US, the US might still be able to export N95 masks to China, if all the Chinese are so busy producing more profitable products like solar panels and microchips that they don't have time to also produce N95 masks, as manifested by Chinese wages rising too high for N95-mask factories to produce N95 masks at competitive prices. However, this does not seem to be the case at present. If anything, the situation is reversed: there are things Germany imports from China, even though Germany could make them domestically from less inputs, because German wages are higher than Chinese wages.

imtringued 5y ago

The Germans save a lot and they refuse to increase public debt which means some other government has to take on that debt. Germany's ability to export its products is actually just its ability to export debts which is only a matter of how far you are willing to go vs your competitors. If everyone followed this strategy there would be no world economy.