Will China’s inflation impact the USA ?

A report by Hale and Hobijn (http://www.frbsf.org/publications/economics/letter/2011/el2011-25.html) suggests that imports from China account for 2.7 % of US consumer expenditure. Of that 2.7%, over 55 % consists of services in the US, thus imports of China constitute 1.2 % of consumption. The article points out that for a $ 500 iphone, $ 179 is the imported cost of the hone assembled in China, but only $ 6.50 is the content from China, the remaining is $ 172.50 is imported into China.  Does this small fraction of imports suggest that the China manufacturing juggernaut is a mirage ? Given the potential for China to become a strategic component of the global supply chain, does the % of China content adequately reflect its global leverage ? Given that China only does assembly for the iphone, do its assemblers still gain the process knowledge to control the smartphone market ?

About aviyer2010

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