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iPhone increases US-China trade deficit by $2 billion

David Quilty

According to a report by a pair of economists out of the Asian Development Bank Institute, the success of Apple's iPhone plays a major role in contributing to the USA's trade deficit with China. The Wall Street Journal (login required) explains that while sales of the iPhone show around a $2 billion trade surplus with China on paper as of 2009, the actual figure is a lot less because the iPhone is only assembled in China, not designed there. While the wholesale price of an iPhone is $178.96, the value of the only truly "Chinese" part is assembly, valued at $6.50 per unit. But because the iPhone ships from inside China, the entire value gets added into the trade figures, thus showing the $2 billion trade surplus. If the numbers actually accounted for the true value coming out of China, the surplus for 2009 would have been about $73 million instead -- meaning that, in reality, there is an almost $2 billion trade deficit just from the iPhone alone.

The report goes on to say that there are many variables at play when looking for the true trade deficit numbers, and lawmakers shouldn't make any trade rules based on such potentially incomplete data. With Apple sales on the rise and its net income following suit, and with Foxconn recently hiring 400,000 workers for its new plants in China, no one is saying that the trade figures between the two countries aren't vital to the economies of both.

[via Business Insider]

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