1. The first chart tells us a couple of things, that Chinese has a very advanced manufacturing industrial base.

The concept of value added, goes like this.

Suppose shampoo and conditioner is the same price. And a bottle of shampoo cost $2 bucks, and a bottle of conditioner cost $2 bucks, but is sold for $2.50 and they make a profit of $0.50 cents.

Now suppose that the company decides to put three quarters of shampoo with one quarter of conditioner, so the new product is shampoo with conditioner, it still cost $2 bucks but now they sell it for $2.75 increasing their profit.

Before the shampoo alone made $0.50 cents profit, now this new product that cost the company the same to make gives them a $0.75 cents profit.

So if some industrial company, has to machine a part with a CNC machine tool, then they charge for that, like how they charge for the conditioner. They could charge very little, or they can mark it up the price. Usually the latter happens. Actually, the latter always happens.

That is your value added.

Putting the conditioner into the shampoo, is the perceived valued added by the consumer, and it is add value added by the company because the product of shampoo with conditioner is better than shampoo alone.

2. Companies like mines, or farmers, they cannot do the value added. They have enough on their hands running their operations. So the value added, gets added down the line in the manufacturing process.

3. Who does the value added, from the first chart, depends on how competitive that company is, in terms of tech and costs and whatnot. For China to lead the world in value added, that says a lot.

4. That is why the second chart looks the way it does. Simply because people want to buy Chinese products. People want to buy those Chinese value added products. Such as a cell phone with 3G, but now with 4G or 5G and A.I. for the value added.

See the connection between better technology and increasing value added, which should mean more profits. That is what China is doing today.

5. So it seems like China 2025 really did work.

6. The third chart just shows where the Chinese exports are coming from. The top half of that chart, all Chinese industries that could do the value added to their products, particularly anything related to electronics.

7. That brings us to the China and United States trade war.

What can we even say?

Take for example, a company like Apple, who makes their cell phones in China. They do it there because they can improve their product more easily with the extensive supply chains inside China. Improve their product, mean put conditioner into the shampoo, means valued added.

So when will Apple return to America to make their phones? What can we really say?

The tariffs from President Trump, they were 25% on a lot of Chinese products in his first term 8 years ago, now a blanket 10% on all Chinese products entering America. China has a $1 trillion dollar trade surplus. This is not going to make a difference.

That seems to be a big point too, that because of China has some much value added exported goods, that this $1 trillion dollar trade surplus is going to stick around for a while.

Why?

Where are you going to find a better product at a better price?

A clear example is the Chinese electric car, more advanced and better price.

China 2025 has done the value added part, and lowered the price too. Due to internal competition within the Chinese market.

Then China Inc. exports worldwide, a proven product, forged in the most competitive market in the world.

Blah blah blah.

Yeah, that is like China today you know.

Some people in the West, just do not appreciate what they are up against.