Perspective

Here is some data on world trade to help put things in perspective


1. In imports and Exports, Canada is USA's #1 trading partner.   http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States

2. Per Capita GDP   Hong Kong beats just about everyone.  (the article is headed with a warning that it is out of date, and clicking one finds challenges to the amounts cited for Turkey, Australia and Zimbawe.  In any event, Hong Kong uber alles.)  

 http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita 

3.  As the % of Chinese goods in the USA economy, we can see

China imports 2010 364 billion   http://www.census.gov/foreign-trade/balance/c5700.html 

USA economy 2010 15 trillion   http://en.wikipedia.org/wiki/Economy_of_the_United_States    .

Divide one into the other, you get about 2.5%.  Chinese goods account for about 2.5% of our economy.

This figure is not secret, the data is available and the San Francisco Fed reported on it.  http://www.frbsf.org/publications/economics/letter/2011/el2011-25.html

Mish Shedlock redid the math and comes up with 2.7%  http://globaleconomicanalysis.blogspot.com/2011/08/made-in-china-only-27-of-us-spending.html

But step back and reflect.  Your home was not made in China.  Your car was not made in China.  Your education was not made in China.  Your oil was not made in China.  Your food was not made in China.  Your medicine was not made in China. Your insurance is not underwritten in China.  When you think about it, 2.7% seems a little high.

Now you may argue that in the context of buying consumer goods such as toys, clothes, tools, sporting goods, electronics, then the number is much higher as a percentage of USA economy. But none of those are everyday purchases, they are disposable income items, and perhaps it is because we consider such purchases, as opposed to our daily bread, at our leisure, we are misled into thinking all is Chinese.  In any case, China, with 1/4 of the world's population underperforms compared to the collection of smaller, but richer countries that collectively outperform China in each and every category.  And keep in mind, that a toy that costs $1 in China and retails for $5 in USA has $4 of USA economy.  When a $5 item is made overseas, it is only $1 loss to the USA economy (very roughly speaking, but you get my point.)

If tomorrow all trade with China ended, it would not much matter to USA, except for the uber wealthy who launder profits and avoid taxes, legally, by overseas trade worldwide, in which China is a critical player.  I am not advocating ending trade with China, but I certainly advocate ending the rules and regulations that at once punish small business and reward big business.  But that is another topic.

And I hope after week two people are considering world trade in homes, cars, education, medicine, energy, insurance services, since all areas are wide open to innovation.

We need hard facts to proceed. Especially when we are talking about specialty markets.  We can get hard facts on the economy, and to have our premises right sure helps in getting conclusions right.  In the coming weeks we will leverage the feedback from actual buyers (it is a good idea and does not exist) and hard data as to the best place in the world to have something made, to drill down to the best supplier in the world for our product or service.

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