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Friday, March 15, 2013

What’s the Difference?—Comparing U.S. and Chinese Trade Data

Michael F. Martin
Specialist in Asian Affairs

The size of the U.S. bilateral trade deficit with China has been and continues to be an important issue in bilateral trade relations. Some Members of Congress view the deficit as a sign of unfair economic policies in China, and have introduced legislation seeking to redress the perceived competitive disadvantage China’s policies have created for U.S. exporters.

There is a large and growing difference between the official trade statistics released by the United States and the People’s Republic of China. According to the United States, the 2012 bilateral trade deficit with China was $315.1 billion. According to China, its trade surplus with the United States was $224.1 billion—$91.0 billion less.

This paper examines the differences in the trade data from the two nations in two ways. First, it compares the trade figures at the two digit level using the Harmonized System to discern any patterns in the discrepancies between the U.S. and Chinese data. This comparison reveals that over three-quarters of the difference in the value of China’s exports to the United States in 2012 was attributable to five types of goods. Those five types of goods, in order of the size of the discrepancy, were electrical machinery; machinery; toys and sporting goods; footwear; and woven apparel.

The second approach to examining the differing trade data involves a review of the existing literature on the technical and non-technical sources of the trade data discrepancies, including two joint China-U.S. reports on statistical discrepancies in merchandise trade data. The literature reveals that the main sources of the discrepancies are differences in the list value of shipments when they leave China and when they enter the United States, and differing attributions of origin and destination of Chinese exports that are transshipped through a third location (such as Hong Kong) before arriving in the United States.

Because of the differences in the official bilateral merchandise trade data, the U.S.-China Joint Commission on Commerce and Trade (JCCT) established a statistical working group. The working group has released two reconciliation studies to identify the causes of the statistical discrepancies. The adjustments contained in the two studies are not meant to imply errors in the official statistics of either country.

This report is updated annually, after the release of official trade data by China and the United States.

Date of Report: February 25, 2013
Number of Pages: 11
Order Number: RS22640
Price: $29.95

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