Highly recommended: the World Bank’s latest China Quarterly by Brad Setser:
Most likely because more and more components are made in China. Stage one involves shifting final assembly to China. But once the one-off cost savings from that shift have been realized, getting more cost savings requires shifting parts production. Stage two consequently involves shifting component production to China. The development of an internal Chinese supply chain for its final assembly plants is, I suspect, a bit reason why China’s trade surplus has increased so dramatically recently.
Brad’s blog is one of those in our blogroll for a reason: when he highly recommends a report that is a good indication of value. Enjoy reading the report.
Related: Top 10 Manufacturing Countries – Manufacturing Data – Accuracy Questions – Manufacturing Jobs Data: USA and China