New measurement may reshape China-U.S. trade ties (2)

Take the most illustrated iPhone case. The traditional measures classify the iPhone as an wholly "Chinese" export to the United States, even though it is entirely designed and owned by a U.S. company and nearly all the component parts have been produced in several Asian and European countries. China's contribution is the final step -- assembling and shipping the handsets.

When the cost of an iPhone is factored into China's trade surplus with the United States, it is highly misleading as only about 4 percent of the full value was retained in China, according to an Asian Development Bank Institute report.

Under the flawed measures, the United States has a big trade deficit with China. This assumption has been the basis for some U.S. politicians' anti-China sentiment and responses to China's currency policies and its allegedly unfair trade practices.

Under the new count, however, the U.S. trade deficit with China would shrink by 25 percent in 2009. On the other hand, the U.S. deficit with Japan, the Republic of Korea and other nations supplying intermediate goods to China is bigger.

The revision is certainly a significant fact that U.S. policymakers should have beaten into their heads before they are allowed to discuss China-U.S. trade imbalances.

Although this would not be enough to eliminate trade disputes between the two countries, it offers a complementary view and may shed a different light on trade measures imposed against China.