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No, their entire economy revolves around exporting value-added goods. They restrict currency movements, but that doesn’t work when you can ship out goods and d
by Scoundreller 4y ago
No, their entire economy revolves around exporting value-added goods.
They restrict currency movements, but that doesn’t work when you can ship out goods and deposit payments overseas. Drugs is one way to do this, but so is virtually any other good.
- Aunche 4y agoThis doesn't seem to be the case here as most of the "value add" is occurring in the US. Bitcoin is another Chinese export that enable capital outflow, but China is taking a lot measures to crack down on it. I'm sure the Bitcoin miners that are still allowed to operate have connections in the CCP, but that doesn't mean the party itself is particularly happy about mining.
- Scoundreller 4y agoFor drugs yes, but China is a machine that takes raw materials and manufactures them into finished goods. Just look for the "Made in ______" label on so many goods. Sure there's lots of margins on the marketing side that's captured and retained wealthy countries, but China is capturing some percentage of so many finished products.
- chrischen 4y agoBut that’s not capital outflow. That’s exporting useless cheap goods for an inflow of capital (USD).
- SgtBastard 4y agoAll of those exported goods are expected to be sold at a markup in other countries, in that countries currency.
- chrischen 4y agoExactly, so China exports goods valued at less than markup, and pockets the markup, resulting in a net cash inflow. This is what is referred to by the “trade deficit” between the US and China. The deficit refers to the fact that China is exporting less valuable things and pocketing the money, and not buying back as many US goods, resulting in a deficit that net moves capital to China.