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Flawed methods exaggerate China-US trade surplus: WTO

(People's Daily Online)

15:22, June 04, 2012

Edited and translated by People's Daily Online

Pascal Lamy, director general of the World Trade Organization, recently said that in the era of globalization of production, the current international trade statistical methods have been outdated and flawed, which exaggerated China-U.S. trade surplus.

Added value imposed on China

In fact, there are mainly two reasons leading to the China-U.S. trade surplus. One is the export control of the United States to China and the other is the loopholes existing in the trade statistical methods.

The long-term export control of the United States to China has greatly contributed to the bilateral trade imbalance. According to the Commerce Minister Chen Deming, it is one-sided to simply interpret the China-U.S. trade surplus as “China is the benefited party and the United States is the losing party.”

For example, about 60 percent of Chinese exports to the United States are from processing trade, with the processing trade surplus reaching nearly 118 billion U.S. dollars in 2009, accounting for 82 percent of China-U.S. trade surplus. Chinese enterprises only obtained a small number of processing charges from the exported products and most of the profits including the fees of design, transportation, warehousing and marketing were obtained by the U.S. enterprises and other foreign enterprises.

Experts said that the surprising consequence was caused by the loopholes in the statistical methods. In 2009, the China-U.S. trade surplus reached more than 140 billion U.S. dollars, among which, about 76 percent was caused by the foreign-funded enterprises. These foreign-funded enterprises are mostly U.S. enterprises in China.

Song Hong, director of the International Trade Research Office of the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said that China actually accounted for only a small part of such trade surplus and most profits were gotten by other countries and regions. Therefore, the China-U.S. trade surplus is the result of regional and even global production.

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Chinese enterprises should strive to achieve vertical integration where a product is totally made in China from top to bottom. Create Chinese brands!

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