IPhone: Not really "made in China"

BEIJING - a widely touted solution for current U.S. economic woes is for America come with more high-tech gadgets, long the rest of the world.

The iPhone $1.9 billion to the U.S. trade deficit with China estimates associated press researchers added last year. Above, an Apple store in Palo Alto, California.

Two academic researchers that Apple Inc.'s iPhone appreciate actually 1.9 billion to the U.S. trade deficit with China - one of the best-selling U.S. technology products - added last year.

How is this possible? The researchers say traditional methods of measuring the global trade produce the number but not according to the complexity of the global trade in the design, manufacture and Assembly of products include several countries.

"A distorted picture" is the result of, say a, the trade imbalances between Nations exaggerates.

Trade statistics in both countries consider the iPhone a Chinese exports to the United States, although it completely designed and owned by a US company, consisting of largely parts in several Asian and European countries produced. China's contribution is the final step - Assembly and shipping of phones.

Estimated so that the entire $178.96 wholesale cost of the supplied phone is credited to China, although the value of the work by Chinese workers at Hon Hai precision industry co. accounts for only 3.6%, or $6.50, total, performed calculated the researchers in a report published this month.

A spokeswoman for Apple, said the company refused to comment on the research.

European Pressphoto Agency two academic researchers have found that the iPhone Apple actually $1.9 billion the U.S. trade deficit with China last year added.

The result is the official statistics, write "Even high-tech products invented by US companies increased not U.S. exports" Yuqing XING and Neal Detert, two researchers at the Asian Development Bank Institute, a think tank in Tokyo in your report.

This is no problem with high-tech products, but with measured as exports and imports, say.

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Research adds to a growing debate about the traditional trade statistics that could have real consequences. Conventional trade figures are the basis for political struggles waging in Washington and Brussels is about what to do about China's monetary policy and its allegedly unfair commercial practices.

"We call" made in China "in fact is assembled in China, but what makes the commercial value of the product comes from numerous countries," the Director-General of the World Trade Organization, Pascal Lamy said in a speech in October. "The concept of the country of origin for manufactured goods has become gradually obsolete."

Mr Lamy, who said helped when trade statistics, adapted to the actual value, a product of different countries, the size of the U.S. trade deficit with China reflect $ 226.88 billion, loud U.S. pay - half would be reduced.

Is correct that bias are difficult because it requires detailed knowledge of products composed.

Breakdown of imports and exports of value added from different countries can lead to some controversial conclusions. Some US Lawmakers argue, for example, China needs to rise to reduce gap between the two nations have to trade the currency clearly against the dollar.

The value added approach, in fact shows that the U.S. economy add sales of the iPhone - instead of subtracting from it, as the traditional approach would mean.

Based on U.S. sales of 11.3 million iPhones in 2009, the researchers estimate exported Chinese iPhone 2.02 billion dollars. After deducting the 121.5 million US dollars in Chinese imports produced for parts of U.S. companies such as chip maker Broadcom Corp., get the figure of Chinese trade surplus $1.9 billion - and US trade deficit in iPhones.

If China was credited with its exports to the United States for the same amount of iPhones a U.S. trade surplus of 48.1 million $, after accounting for parts U.S. help companies produce only its part of the value of which would be an iPhone.

Other economists say some aspects of the research method can overstate your case have. The study, for example, assumes that companies such as Toshiba Corp. and Samsung Electronics Co., to complete the components for the iPhone mounted in their home countries.

But many of Apple's suppliers have production facilities in China, it is likely that any part of the components that you develop for the iPhone are made in China and.

The latest results are the personal computing industry Center at the University of California, Irvine, trade analysis and production of another Apple product in terms similar to the iPod. The research found also credited that Chinese work accounted for only a few dollars from the iPod value although trade statistics China with its full value produce.

Quoted in a speech in New York in September the Chinese Prime Minister Wen Jiabao, that research that trade to argue, excessive tension between the USA and China are. Many of China's exports are products manufactured in China on contract for foreign companies, he said that China should criticise the United States to run a large trade surplus.

Wen "Main beneficiaries are foreign-funded enterprises, including those of the United States," this system, said Mr.

-Loretta Chao contributed to this article.

Write toAndrew Batson at andrew.batson@wsj.com

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