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Viewed from the property-based “Citizen-to-Citizen” Trade Statistic Method, the Sino-US Trade maintains a basic balance
Financial Research Institute under Chinese Academy of Social Sciences
As indicated in the statistics from China Customs, in 2005 China enjoyed a favorable balance of trade with the U.S.A. for 114.17 million dollars. As a matter of fact, this colossal favorable balance of trade is an “illusion” ridiculously deriving from the deficiency of the prevailing international trade statistic method. However, if the property-based “National” Trade Statistic Method were adopted and other factors were taken into consideration, such as, deducting the net export to the US by foreign invested enterprises (including US invested enterprises) and the “net export” to the Chinese citizens within Mainland China by the US invested enterprises in China and the export to the US realized by Asian countries through the Chinese enterprises, it was likely that the Sino-US Trade maintained a basic balance in 2005, or there might exist a certain adverse balance of trade.
Rules of origin fail to reflect the genuine value increment of the Sino-US Trade
The US trade deficit with China reflected in the US government’s statistics is, more often than not, larger than the Sino-US trade surplus as indicated in the statistics of China Customs. It is generally believed that price factors and rules of origin contribute to the disparity.
China statistics is compiled on FOB basis while the US statistics is tabulated on CIF basis, so the FOB price is 5% higher than CIF price, which clearly demonstrates the fact that the statistic import volume from China by the US is higher than the Chinese statistic export volume to the US. The disparity lies in that the US export is calculated on FOB basis while the Chinese import is calculated on CIF basis, thus the US statistic export to China is lower than the Chinese statistic import from the US. The disparity in calculation leads to the larger US-China trade deficit on the part of the US than the Sino-US trade surplus on the part of China.
In addition, the US statistics, based on “Rules of origin”, calculates all the entrepot trade from Mainland China via Hong Kong to the US as the total export from China. In fact, this statistic method is far from rational. For example, the US imported “Barbie Doll” toys from China via Hong Kong at the price of two dollars, from which China only gained 35 cents as service charge and another 65 cents was used for import of raw materials and one dollar for transport and management. So calculated in terms of rules of origin, the export to the US from China is two dollars, but if calculated in terms of value increment, the export from China to the US is only 35 cents. It is evident that rules of origin exaggerate China’s trade surplus with the US.
[ Last edited by andrewyan at 2006-5-12 08:42 PM ]