The China - United States Bilateral Trade Balance: How Big is it Really?

UCSC Economics Dept No 369

Posted: 11 Apr 1997

See all articles by K. C. Fung

K. C. Fung

University of California at Santa Cruz

Lawrence J. Lau

Chinese University of Hong Kong-Institute of Global Economics and Finance

Date Written: January 1997

Abstract

There are huge discrepancies between the official Chinese and U.S. estimates of the bilateral trade balance. The discrepancies are caused by different treatments accorded to re-exports through Hong Kong, re-export markups, and trade in services. Deficit-shifting between China, on the one hand, and Hong Kong and Taiwan, on the other, due to direct investment in China from Taiwan and Hong Kong, is partly responsible for the growth in the China - United States bilateral trade deficit. The 1995 China - United States bilateral balance of trade in goods and services, adjusted by both re-exports and re-export markups, may be estimated as US$23.3 billion, a large deficit but considerably smaller than the often-cited official U.S. figure of US$33.8 billion.

JEL Classification: F15, O53

Suggested Citation

Fung, K.C. and Lau, Lawrence J., The China - United States Bilateral Trade Balance: How Big is it Really? (January 1997). UCSC Economics Dept No 369, Available at SSRN: https://ssrn.com/abstract=4815

K.C. Fung (Contact Author)

University of California at Santa Cruz ( email )

Santa Cruz, CA 95064
United States
831-459-3273 (Phone)
831-459-5900 (Fax)

Lawrence J. Lau

Chinese University of Hong Kong-Institute of Global Economics and Finance ( email )

13/F., Cheng Yu Tung Building
12 Chak Cheung St.
Shatin, NT
Hong Kong
+852 3943-1611 (Phone)
+852 2603-5230 (Fax)

HOME PAGE: http://www.igef.cuhk.edu.hk/ljl

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