When we buy goods produced throughout much of Asia there are a number of factors at work other than labor and material costs which affect the wholesale price we pay. That is one of the reasons we don't necessarily see changes in commidity costs reflected in wholesale prices.
Prices we pay depend a lot on the relationship of the USD in which most prices are quoted and most bills settled and the local currency - especially in the larger Asian countries.
Asian countries that are able to do so are not above manipulating exchange rates to their advantage - even some of our long time trading partners will still try from time to time to tinker with exchange rates to help their own economy at our expense.
China is in a position to manipulate the dollar exchange for their currency and in my opinion they take advantage of this. This is because the Chinese currency is not generally accepted for settling international debts. Taiwan not so much.
Prices will also reflect the ownership of the company - some companies are still state owned in China while others are owned at least in part by private parties. They trade under a different set of rules, the private companies are interested in profit - state owned not so much.
What can happen is this: China's costs are measured in their local currency and they really set the exchange rate, hence they sell a product for dollars and get paid in dollars, the dollars are then exchanged by their central bank for local currency. By holding the exchange rate in their favor the bank (government) can keep their export prices lower than they might otherwise be so you can often buy the same item for a lot less money. They can also control tariffs and put other controls on imports that make foreign goods more expensive giving their companies a 'closed' market to sell in at higher prices than otherwise (Japan was famous for this). Since we are selling them high tech stuff and food and they are selling us mass market commodities, the controls they put in place are only where it is a decided advantage to them. We on the other hand are operation basically a free market with low or no tariffs and relatively few controls.
BTW we have many of the same problems with Europe on certain goods. They don't get nearly as much press though because we (and they) have production facilities and/or subsidiaries in each other's countries - It took about 50 years after WWII to really get there.
It is a complex game but it does explain why it might look to us that China is selling some things for less than production costs. Re - 24kt Gold - China is the worlds largest producer of gold - and is still somewhat of an importer but it does mean that the average cost of gold to China is way below the spot price on the international market.
Prices we pay depend a lot on the relationship of the USD in which most prices are quoted and most bills settled and the local currency - especially in the larger Asian countries.
Asian countries that are able to do so are not above manipulating exchange rates to their advantage - even some of our long time trading partners will still try from time to time to tinker with exchange rates to help their own economy at our expense.
China is in a position to manipulate the dollar exchange for their currency and in my opinion they take advantage of this. This is because the Chinese currency is not generally accepted for settling international debts. Taiwan not so much.
Prices will also reflect the ownership of the company - some companies are still state owned in China while others are owned at least in part by private parties. They trade under a different set of rules, the private companies are interested in profit - state owned not so much.
What can happen is this: China's costs are measured in their local currency and they really set the exchange rate, hence they sell a product for dollars and get paid in dollars, the dollars are then exchanged by their central bank for local currency. By holding the exchange rate in their favor the bank (government) can keep their export prices lower than they might otherwise be so you can often buy the same item for a lot less money. They can also control tariffs and put other controls on imports that make foreign goods more expensive giving their companies a 'closed' market to sell in at higher prices than otherwise (Japan was famous for this). Since we are selling them high tech stuff and food and they are selling us mass market commodities, the controls they put in place are only where it is a decided advantage to them. We on the other hand are operation basically a free market with low or no tariffs and relatively few controls.
BTW we have many of the same problems with Europe on certain goods. They don't get nearly as much press though because we (and they) have production facilities and/or subsidiaries in each other's countries - It took about 50 years after WWII to really get there.
It is a complex game but it does explain why it might look to us that China is selling some things for less than production costs. Re - 24kt Gold - China is the worlds largest producer of gold - and is still somewhat of an importer but it does mean that the average cost of gold to China is way below the spot price on the international market.
