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China still lags US in trade

2013-02-15 08:10 China Daily     Web Editor: Mo Hong'e comment

Different accounting methods 'lead to misunderstanding'

The Ministry of Commerce has quashed recent media reports speculating that China had surpassed the United States to become the world's biggest trading nation by volume.

Recent data from the world's two largest economies show that Chinese trade in goods and services reached $3.87 trillion in 2012, according to the General Administration of Customs, while the value of US exports and imports was $3.82 trillion, according to the US Commerce Department.

The ministry said, however, that China's combined export and import volume from last year is below that of the US when the same method of measurement is used.

A ministry official, who wasn't identified, said on Wednesday the Commerce Department released two sets of figures for US trade last year: $3.82 trillion based on the country's international balance of payments, and $3.882 trillion based on a measurement similar to that used by the World Trade Organization. Only the smaller number was compared with China's volume.

The official said the WTO's annual trade report, which will be released within a month, will show a continued 1-2 ranking of the US and China.

Reading too much into numbers derived from different accounting methods can be tricky, trade experts said. Derek Scissors, a research fellow on Asian economic policy at the conservative Heritage Foundation in Washington, pointed to the role of the global supply chain in measuring trade volumes.

"If the parts are just assembled in China and then exported, China gets credit for exporting the whole product, even though no parts were made there," Scissors wrote on his blog.

He said the effect of that approach is felt most acutely in high-value US imports of electronics, including mobile phones and computers.

"Most of the value of these products comes from outside China, including from the US. Yet the whole phone or computer is counted as a Chinese export to the US. This doesn't make sense," Scissors wrote.

Eswar Prasad, a professor at Cornell University and a former China division chief at the International Monetary Fund, said China is the one trading partner to which US exports are on track to double during a five-year period.

"If China's recent shift toward private consumption-led growth proves durable and intensifies, its demand for imports of consumer goods and services will rise, especially if the exchange rate continues to appreciate," Prasad said.

"This could help further boost US exports and solidify China's position as one of the fastest-growing markets for US exports."

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