(China) Trade surplus with US exaggerated

China Daily ^ | December 25th 2010 | Li Jie

[Cardhu]

There is a theory in statistics that says different methods used to tabulate and analyze the same set of data will yield different results. This applies perfectly to international trade.

For some time now, the United States has been pressuring China to reduce its "huge trade surplus". But do the methods used to tabulate and analyze data give us the true picture of China-US trade? Let facts speak for themselves.

Rules of origin are widely used today to determine a product's country of origin for purposes of international trade. But the rules of origin method, which originated in the 1940s, has little room for processing trade and transshipments, which are rampant in the international market today.

That is why the analyses of data through rules of origin fail to give the true picture of international trade. And that is why China has a huge trade surplus with the US.

Several experts have said that if China-US trade figures are analyzed using a method other than the rules of origin, China's trade surplus with the US would drop by at least 40 percent.

An article in Paris-based Le Figaro has quoted the World Trade Organization (WTO) as saying that China's trade surplus with the US is over-estimated by about 50 percent. WTO Director-General Pascal Lamy has said that the most important part of international trade is not the imbalance but value addition.

The use of rules of origin to analyze processing trade tends to distort the true picture and produce erroneous results, which has been the case with China's foreign trade. Value addition in China's exports is very low because most of the materials and spare parts used to make them are imported. But the US ignores this and counts the whole product as made in China.

[1rudeboy]

Marxist. How dare you show your face on FR.