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All-American Apple? iPhone 5’s Monster Lift for China

Monday, 17 Sep 2012 | 12:31 PM ET

Boosted by the red-hot iPhone 5, exports of Apple products will give the Chinese economy a monster lift in the fourth quarter, according to Barclays.

iPhone 5
Source: Apple
iPhone 5

“We estimate that as much as one-third of Chinese export growth in 4Q12 will be Apple related,” said Jon Windham, an analyst for the firm, in a note Monday.

The new iPhone 5, along with the iPad, iPod and Mac lines, are assembled in China, using many materials from the region as well. The company sold 2 million iPhone 5s in the first 24 hours the device went on sale.

China still exports many more things than Apple products — everything from socks to steel. In fact, on an overall basis, Apple products will account for just four percent of total China exports in the last quarter of this year, according to Barclays. Still, it seems like the country is turning to Apple to drive that second derivative: growth.

Shares of Apple surged to a new record high as pre-order numbers of its new phone began to hit the Street. Just like its predecessors, the device says on the back of it, “Designed by Apple in California. Assembled in China.”

Apple has been criticized in the past for working conditions of its plants in China, however the company has tried to stem that outcry by carrying out more inspections of factories and by publishing an annual supplier responsibility report.

But before one jumps all over Apple for outsourcing jobs when America's economy is struggling, one must look at how the US benefits from this arrangement as well, says Mitch Goldberg of Client First Strategy. From its retail store employees to the high-paid engineering jobs created here in the US, Apple does much for its home country’s economy, he said.

(Read More: Apple's iPhone 5 Sales Could Add Half a Point to GDP)

And the outsourced manufacturing allowed Apple to charge the same price for the iPhone 5 as it did for the iPhone 4S, he said.

Sales of Apple’s new device could add as much as half a percentage point to U.S. fourth quarter GDP, according to JPMorgan .

“The company should manufacture its products anywhere on the globe it deems best,” said Client First Strategy's Goldberg. “If China benefits, then so be it. If anyone finds it so repugnant that the Chinese economy benefits from manufacturing Apple products, they are allowed to vote with their dollars and buy an alternative made elsewhere.”

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