Recent McKinsey research suggests that although exports are an important driver of economic growth in China, they are less dominant than conventional wisdom would have it: many of the country’s export shipments include imported goods that are reassembled, combined with domestic content, or otherwise modified before being exported. Failing to remove these imports from total exports overstates the contribution of exports to GDP.

The researchers thus developed a metric called domestic value-added exports—what you get after subtracting from total exports all imports used to produce goods and services that are subsequently exported. They found that China’s export sector contributed 19 to 33 percent of total GDP growth from 2002 to 2008, about half the contribution indicated by total-exports metrics. To learn more, read “A truer picture of China’s export machine” (September 2010).

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