In order to understand the growth of Chinese machinery exports, we now turn to the detailed trade data. Figure 5 shows exports of the machinery categories and the optical category (HS 90) at the 4-digit level; on the left is data for 2002 and on the right is data for 2007.As the figure illustrates, growth in the machinery categories was highly concentrated in high-tech goods. Digging even deeper, the 8-digit categories, shown in Figure 6, reveal that the growth of machinery exports was dominated by four products—cell phones, liquid crystal displays (LCDs), integrated electronic circuits, and laptops—which together accounted for more than a third of the growth.This concentration of export growth argues against China’s exchange rate regime playing the major role. The exchange rate should have a more-or-less even handed influence across China’s export industries, as all goods are made relatively cheaper, and therefore it is not a plausible explanation for the outsized growth of particular categories.Instead, the influence of the exchange rate can perhaps best be seen in the wide range of smaller bars in Figure 4. Most subcategories of machinery exports increased significantly over the period, but their growth was dwarfed by a few categories for which we have special stories. For this reason, we believe papers that explain Chinese trade using more aggregated data, such as Ahmed (2010), Marquez and Schindler (2007), and Thorbecke and Smith (2010) likely overestimate the importance of the exchange rate. But even using the relatively high elasticities common in the literature, the exchange rate