China expected to see soaring high value added exports

China's exports of high value added products is expected to grow at more than 30 percent in the next three to five years, Germany's largest commercial bank, Deutsche Bank has predicted.

A report from the bank on the study said the annual growth rate of China's exports of high value added products would sit between 30 and 40 percent.

The report said China recorded growth rates between 30 and 150 percent last year in exports of a number of high value added products, including telecommunications equipment, software, high-tech machines, electronic components, and automobile parts.

Ma Jun, chief economist with Deutsche Bank's China's section, said China's low share of global market offered opportunities to increase exports.

China-made high-end automobile products only accounted for 0.1 percent of global market, with advanced software accounting for 0.4 percent. High value added integrated circuits held 5 percent of the global market, said Ma.

Compared with its major rivals in the manufacture of high value added products, Japan and the Republic of Korea (ROK), China had the advantage of low production costs, said Ma.

China's land costs were only one tenth those of Japan and one fifth of ROK, while the labor costs were one 22nd those of Japan and one 13th those of ROK.

The bank report said the average net profits rate of high-end products in eight industries was 16 percent, while that of some low-end products like shoes, clothes and home appliances was only 2 or 3 percent.

Ma said appreciation of the RMB, increasing labor costs, the decrease in tariffs and lower growth of the U.S. economy could influence China's exports of low-end products, but would have a quite limited influence on exports of high value added products.

The fluctuation of China's currency in the next 12 months would have little effect on exports, he said.

Source: Xinhua