Calculation methods cause disparity

Updated 2018-04-04 11:15:03 China Daily

A Boeing 737 plane, destined for China's Okay Airways, waits to depart from Seattle, Washington state, on March 24. Boeing is building a completion and delivery center in Zhejiang province.

Trade experts and government officials have urged for updated methods to calculate trade from the perspective of the global value chain, which analyze the value added by a country in the production process.

Amid escalating China-U.S. trade tensions, they said conventional measurement of trade - recording gross flows of products each time they cross borders - is a primary cause of China's stubbornly high trade surplus with the U.S..

The Sino-U.S. trade surplus between 2010 and 2013, if calculated by trade in added value, would have been 48 to 56 percent lower than the figure calculated by the traditional method, according to the Chinese Academy of Sciences.

Though the two countries currently both use the traditional way of calculation, different measurements of trade between China and the U.S. is a key factor leading to the disparity.

A working group, with experts from both governments, has conducted comparative studies on the differences in Sino-U.S. trade statistics, Minister of Commerce Zhong Shan said in March.

According to their calculations, the U.S. official statistics on the trade deficit with China were 21 percent higher than the actual situation last year, he said.

Wei Jianguo, former vice-minister of commerce, said China should not be "made a scapegoat" for the obsolete measurement of trade.

The traditional way based on rules of origin - rules that determine where goods were obtained or manufactured - needs improving, Wei told China Daily.

It's one of the main reasons behind China's seemingly big trade surplus with countries including the United States, as China has a large proportion of processing trade, he said.

The processing trade refers to domestic firms importing raw materials from abroad, processing or assembling them locally, and exporting the value-added goods.

In 2016, processing trade accounted for 44.8 percent of China's exports to the U.S., in contrast to less than 15 percent in U.S. exports to China, according to Global Value Chain and China Trade in Value Added Database, a Chinese research body.

Yang Cuihong, a research fellow at the Academy of Mathematics and Systems Science under the Chinese Academy of Sciences, said in a research note: "It is important to calculate trade in added value and clarify the role of each economy in the global value chain."

It is a more objective and rational way to measure trade interest, and depicts a fuller picture of commercial relations between nations, Yang said.

Gao Feng, spokesman of the Ministry of Commerce, said the country's trade surplus with the U.S. is "complementary" from the perspective of the global value chain.

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