What’s the Difference?—Comparing U.S. and
Chinese Trade Data
Michael F. Martin
Analyst in Asian Trade and Finance
March 27, 2009Specialist in Asian Affairs
May 4, 2015
Congressional Research Service
7-5700
www.crs.gov
RS22640
CRS Report for Congress
Prepared for Members and Committees of Congress
What’s the Difference?—Comparing U.S. and Chinese Trade Data
Summary
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 20082014 bilateral trade
deficit with China was $266.3342.6 billion. According to China, its trade surplus with the United States
was $170.8237.0 billion—$95.5105.6 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 two-thirds90% of the difference in the value of China’s exports to the United States isin 2014 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
leather articles.
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. This report is updated annually, after the release of official trade data by China
and the data discrepancies. 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 in 2004.
The working group has released two reconciliation studies (in 2009 and 2012) 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.
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What’s the Difference?—Comparing U.S. and Chinese Trade Data
Contents
Introduction...................................................................................................................................... 1
Comparison of U.S. and Chinese Trade Data .................................................................................. 1
Delving into the Data: Examining HS Code .................................................................................... 2
Explaining the Differences: Literature Summary ....Summary of the Literature ...............................................................4......... 3
Technical Explanations .............................................................................................................. 4
Official Definitions of Exports and Imports........................................................................ 4
Definition of Territory ......................................................................................................... 4
Timing ................................................................................................................................. 4
Declaration of Country of Origin ......................................................................................5.. 4
Exchange Rates ...............................................................................................................5.... 4
Non-Technical Explanations...................................................................................................... 5
Value Differences in Direct Trade ...................................................................5
Intermediation.................... 5
Under-Invoicing ..............................................................................................5
Under-Invoicing.................... 5
Intermediation .................................................................................................................5.... 5
Joint China-U.S. Studies of Discrepancies ...................................................................................... 6
Implications for Congress ................................................................................................................ 6
Selected Bibliography on the Differences Between U.S. and Chinese Bilateral Trade
Figures ......................................................................................................................................6.... 7
Tables
Table 1. U.S. and Chinese Trade Figures, 2001-20082014 ..................................................................... 2
Table 2. Top 10Five Discrepancies for U.S. Imports from China, 2008 2014............................................... 3
Contacts
Author Contact Information .........................................................................................................7.... 8
Congressional Research Service
What’s the Difference?—Comparing U.S. and Chinese Trade Data
U
.S. tradeIntroduction
The U.S. merchandise trade deficit with the People’s Republic of China (China) is becoming increasingly
contentious as the U.S. bilateral trade deficit rises.1 Debate over this trade deficit is
hampered because ofremains a major
source of bilateral tension. Members of Congress and other U.S. government officials often point
to the bilateral trade imbalance as evidence that China is not competing fairly in the global
market.1
Debate over this trade deficit is hampered by disagreement between the two countries on how
large the deficit
actually is. According to official U.S. figures, China has surpassed Canada as the
largest supplier
of U.S. imports, running up a bilateral trade surplus of $266.3 billion in the process. However,
in 2014 of $342.6 billion.
However, according to theofficial Chinese, its figures, China’s trade surplus with the United States in
2013 was only $170.8237.0 billion—$95.5
105.6 billion less than the U.S. figure (see Table 1).
The size of the bilateral trade deficit also has been an issue in proposed legislation addressing
trade relations with China. For instance, H.R. 1002, which was introduced during the 110th
Congress, would have imposed tariffs on Chinese imports unless China revalues its currency. The
bill explicitly listed the official U.S. figures for the bilateral trade deficit with China among its
findings. Similarly, H.R. 782 and S. 364, also introduced in the 110th Congress, would have
classified “exchange rate misalignment” or “exchange rate manipulation” as a countervailable
export subsidy. Both bills cited bilateral trade deficits as evidence of exchange rate misalignment
or manipulationexample, the Emergency China Trade Act (H.R. 2909) introduced
during the 112th Congress would have revoked normal trade relations (NTR) status, also known as
most favored nation (MFN) trade status, for China and required the President to negotiate a trade
agreement with China that would “achieve and maintain balanced trade” between the two nations
within four years of the bill’s enactment. As of the time this report was released, no similar
legislation had been introduced by the 114th Congress.
Comparison of U.S. and Chinese Trade Data
Table 1 lists the official trade statistics from the United States and China for the years 2001 to
20082014, using official trade data.2 According to both countries, the U.S. trade deficit with China is
large and growing. Where the two sides differ is how big the deficit is and how fast it is growinghas grown.
From the U.S. perspective, its bilateral trade deficit with China more than trebledquadrupled in value over
over the last eight13 years, from just over $83 billion in 2001 to over $266342 billion in 20082014. However,
from the Chinese view, its bilateral trade surplus with the United States increased more than
sixfold over the last eight yearseight-fold, from
about $28 billion in 2001 to nearly $171 billion in 2008.
1
For a more detailed discussion of key Sino-U.S. trade issues, see CRS Report RL33536, China-U.S. Trade Issues, by
Wayne M. Morrison, and CRS Report RL31403, China’s Trade with the United States and the World, by Thomas Lum
and Dick K. Nanto.
2
China values its export data using the “free on board,” or F.O.B. method and its imports are valued using the “cost,
insurance, and more than $237 billion in 2014.
Table 1 reveals that most of the discrepancy between the trade data from the two nations stems
from significantly different figures for China’s exports to the United States. While the difference
between the U.S. and Chinese figures for U.S. exports to China was generally less than $10
billion until 2011, China’s figures for its exports to the United States differed by $48.0 billion in
2001 and $96.0 billion in 2014. However, the discrepancy between U.S. export and Chinese
import figures for bilateral trade has been rising in recent years.
1
Both China and the United States have substantial trade surpluses with some trading partners and trade deficits with
other trading partners. Also, the phenomena of significant difference in the trade figures between two trading partners
is not uncommon. The size of the differential between China and the United States is particularly large.
2
China values its exports using the “free on board,” or F.O.B. method and its imports using the “cost, insurance, and
freight,” or C.I.F. method. The United States values its exports using the “freight along side,” or F.A.S.
method and its
imports are valued using the “Customs value” method. The implications of the different evaluation
methods isare discussed later in this
the report.
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Table 1. U.S. and Chinese Trade Figures, 2001-20082014
(billion U.S. dollars)
U.S.Chinese Trade Figures
ChineseU.S. Trade Figures
Year
Exports to
China
(F.A.S.)
Imports
from
China
(Customs)
Exports to
United C.V.)
Trade
Balance
Exports
to
United
States
(F.O.B.)
Imports
from
United
States
(C.I.F.)
Trade
Balance
2001
19.235
102.280
-83.045
54.277
26.204
28.073
2002
22.053
125.168
-103.115
69.959
27.228
42.731
2003
28.418
152.379
-123.961
92.510
33.883
58.627
2004
34.721
196.699
-161.978
124.973
44.653
80.320
2005
41.837
243.462
-201.625
162.939
48.735
114.204
2006
55.224
287.773
-232.549
203.516
59.222
144.294
2007
65.238
321.508
-256.270
232.761
69.861
162.900
2008
71.457
337.790
-266.333
252.327
81.486
170.841
2009
69.576
296.402
-226.826
220.706
77.433
143.273
2010
91.878
364.944
-273.066
283.184
101.310
181.873
2011
103.879
399.335
-295.457
324.300
118.121
206.180
2012
110.590
425.644
-315.053
351.884
127.755
224.129
2013
122.016
440.434
-318.417
368.349
145.926
222.423
2014
124.024
466.656
-342.633
396.082
159.036
237.046
Source: China’s General Administration of Customs, Global Trade Atlas, U.S. International Trade Commission.
Note: China values its exports using the “free on board,” or F.O.B. method and its imports using the “cost,
insurance, and freight,” or C.I.F. method. The United States values its exports using the “free alongside,” or
F.A.S. method and its imports using the “Customs value” (C.V.) method.
Delving into the Data: Examining HS Code
The most widely used international system for classifying traded goods is the Harmonized
Commodity
252.327
81.486
Source: Global Trade Atlas, U.S. International Trade Commission.
Table 1 reveals that most of the discrepancy between the trade data from the two nations stems
from significantly different figures for China’s exports to the United States. While the difference
between the U.S. and Chinese figures for U.S. exports to China has been $10 billion or less over
the last eight years, China’s figures for its exports to the United States differed by $48.0 billion in
2001 and $85.5 billion in 2008.
Delving into the Data: Examining HS Code
The most widely used system for classifying traded goods is the Harmonized Commodity
Description and Coding System, commonly referred to as the Harmonized System or
simply HS
Code. Every product traded is classified into a 10-digit code. The first two digits of the products
code corresponds
products code correspond to one of the 98 HS “chapters,” that classify all goods in general
categories. The
U.S. International Trade Commission maintains the U.S. version of the HS Code,
officially called
the “Harmonized Tariff Schedule of the United States,” or HTS. Since both the
United States and
China release China use the same HS chapters, it is possible to compare the trade data at this
level.
Table 2 lists in rank order the top tenfive HS chapters according to the difference between the figures
figures for U.S. imports from China and Chinese exports to the United States for 20082014. In all 10 five
cases,
the U.S. import figures exceeded China’s export figures. The top five HS chapters—footwear
leather
articles (42), footwear (64), machinery (84), electrical machinery (85), furniture (94), and toys and sporting goods
goods (95)—account for over two-thirds (66.8%)90% of the difference between the U.S. and Chinese
figures. The top 10 chapters collectively account for 83.9% of the difference. figures.
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Table 2.Top 10 Discrepancies for U.S. Imports from China, 2008
(billion dollars)
HS Chapter
U.S. Imports
from China
(U.S. data)
China’s Exports
to U.S.
(China Data)
Difference
Electrical Machinery (85)
80.348
58.387
21.961
Toys and Sporting Goods (95)
27.181
12.279
14.902
Machinery (84)
65.147
55.097
10.050
Footwear (64)
14.479
9.317
5.162
Furniture (94)
19.405
14.412
4.993
Woven Apparel (62)
13.317
9.101
4.216
Knitted Apparel (61)
10.683
7.291
3.392
Leather Goods (42)
7.386
4.220
3.166
Plastic (39)
8.937
6.354
2.583
Precious Stones (71)
2.706
1.400
1.306
Source: Global Trade Atlas, U.S. International Trade Commission.
MostAll five of these 10 chapters also ranked high according to both countries in terms of their absolute
value of trade. The first six chapters listed in Table 2 were also the top six ranked chapters in
With the exception of leather articles, the other four were among the top five
ranked chapters in terms of the value of imports from China, according to the United States, and
accounted for
65 60.1% of the total value of imports in 2008. The first four sources for the discrepancies were also
the top four sources of exports to the United States, according to China. Of the 10 chapters listed
in Table 2, eight were among the top 10 sources of China’s exports (leather goods ranked 14th and
precious stones was 23rd among the HS chapters)3 and nine were among the top10 in rank order,
according to the United States (precious stones was 25th).4 The 10 chapters listed above provided
73.9% of the value of what the United States said it imported from China in 2008, and 70.5% of
what China said it exported to the United States.
On the other side of the trade equation, there were six chapters where China’s imports exceeded
U.S. exports by more than $1 billion, and four chapters where U.S. exports exceeded Chinese
imports by more than $1 billion. China’s imports from the United States of grains, seeds, and
fruits (12); chemical products (38); plastic (39); machinery (84); electrical machinery (85); and
optical and medical equipment (90) were more than $1 billion greater than the U.S. exports to
China. However, U.S. exports to China of iron and steel (72); copper (74); aluminum (76); and
aircraft (88) were more than $1 billion greater than China’s imports from the United States2014. Four of the sources of discrepancies—
electrical machinery, footwear, machinery, and toys and sporting goods—were among the top 10
sources of exports to the United States, according to China.
Table 2. Top Five Discrepancies for U.S. Imports from China, 2014
(billion dollars)
HS Chapter
U.S. Imports
from China
(U.S. data,
using C.V.)
China’s Exports
to U.S.
(China data,
using F.O.B.)
Difference
Electrical Machinery (85)
127.086
92.063
35.022
Machinery (84)
105.255
90.796
14.458
Toys and Sporting Goods (95)
22.597
13.195
9.402
Footwear (64)
17.066
13.859
3.218
8.537
6.838
1.699
Leather Articles (42)
Source: Global Trade Atlas, U.S. International Trade Commission.
On the other side of the trade equation, there were five chapters where China’s imports exceeded
U.S. exports by more than $1 billion, and no chapters where U.S. exports exceeded Chinese
imports by more than $1 billion. China’s officially reported imports from the United States of
miscellaneous grains, seeds and fruits (12); organic chemicals (29); plastic (39); machinery (84);
electrical machinery (85); and optical and medical equipment (90) were more than $1 billion
greater than the official U.S. exports to China.
It is also worth noting that on both sides of the trade balance equation, two of the greatest
differences in the official trade statistics of the two nations occurred in the same HS chapters—
machinery (84) and electrical machinery (85). The discrepancies between the official trade
statistics for these two types of goods have been consistently large for flows in both directions
3
According to China’s export figures, iron and steel (chapter 73) ranked 6th and Non-railway vehicles (chapter 87)
ranked 9th among the chapters.
4
According to U.S. import figures, iron and steel (chapter 73) ranked 8th among the chapters.
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since 2001. This indicates
since 2001, indicating a systemic difference in the evaluation of the bilateral trade of these
goods.
Explaining the Differences: Summary of the
LiteratureLiterature Summary
The question as to why China’s official statistics are routinely much lower in value than the
official U.S. trade statistics has been and continues to be the subject of analysis by scholars,
government officials, and other interested parties. The following is a short review of some of the
key explanations provided in this literature, categorized into “technical” and “non-technical”
explanations. “Technical” explanations refer to procedural or administrative causes for the
discrepancies; “non-technical” explanations include causes arising from non-procedural or
administrative sources.
nonadministrative sources.
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What’s the Difference?—Comparing U.S. and Chinese Trade Data
Technical Explanations
Official Definitions of Exports and Imports
In its official statistics, China evaluates exports using the more commonly used “free on board,”
(F.O.B.) definition5 and theterms,3 and evaluates imports using “cost, insurance, and freight, (C.I.F.) definition6 to evaluate imports.
The ” (C.I.F.) terms.4 The
United States, however, reports its exports evaluated by using the “freight along side”
(F.A.S.) definition7 and values using “free alongside” (F.A.S.) terms5 and values
imports using a customs definition. 86 As a result, official U.S. trade
data placesplace a lower value on
both U.S. exports to China and imports from China than the official
Chinese data. In addition,
direct comparisons of the official U.S. and Chinese trade balances
reported in the media are
potentially misleading because the goods trades are being evaluated
using different methods. For
more accurate direct comparisons, the trade data for both nations
should be determined by using the same definition
same terms, such as the general international convention of
practice of F.O.B. for exports and C.I.F. for imports.
Definition of Territory
The United States includes Puerto Rico and the U.S. Virgin Islands in its trade data; China does
not,. China treats Puerto Rico and the U.S. Virgin Islands as separate customs territories.
According to most studies, this is a comparatively minor source of difference in the trade figures.
Timing
Because of the distance between China and the United States, it takes time between the export of
the goods from China and their import in the United States. Goods in transit at the end of the year
5
6
are counted as exports by China, but not as imports by the United States. However, the lag
between shipments occurs at the beginning and the end of the year, thus minimizing the effect of
timing on the overall trade balance difference.
Declaration of Country of Origin
The current practice of U.S. Customs is to rely on the declaration of the importer to determine the
country of origin. Some analysts believe that importers are misidentifying a significant amount of
imports as Chinese.
Exchange Rates
Because China’s currency, the renminbi, is allowed to fluctuate within a small range, the
exchange rate between the renminbi and the U.S. dollar changes over time.7 The value of a
3
“Free on board” includes the cost of getting the goods to port and loading them onto the ship.; sometimes also referred
to as “freight on board.”
4
The C.I.F. definition adds the cost of insurance and shipping (freight) to the value of the imported goods.
7
5
Unlike F.O.B., F.A.S. does not include the costs of clearclearing the goods for export and loading the goods. As a result, the
the FAS value of a shipment is less than its FOB value.
86
The customs definition only includes the actual cost of the goods; it does not include the cost of insurance and freight.
As a result the customs value of a shipment is less than its CIF value.
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are counted as exports by China, but not as imports by the United States. However, the lag
between shipments occurs at the beginning and the end of the year, and thus minimize the effect
of timing on the overall trade balance difference.
Declaration of Country of Origin
The current practice of U.S. Customs is to rely on the declaration of the importer to determine the
country of origin. Some analysts believe that importers are misidentifying a significant amount of
imports as Chinese.
Exchange Rates
Because China’s currency, the renminbi (people’s money), is allowed to fluctuate within a small
range against a basket of foreign currencies, the exchange rate between the renminbi and the U.S.
dollar changes over time. The value of a shipment may change between the date it leaves China
and it arrives in the United States due to changes in the exchange rate. Although the renminbi has
appreciated against the U.S. dollar over the last few years, exchange rate changes are not
considered a major factor in the discrepancy in the trade figures.
Non-Technical Explanations
Intermediation
Although estimates vary, most analysts agree that a large portion of China’s exports arrive in the
United States via a third party; Hong Kong being the most commonly identified location. 9 The
intermediation of shipments raises two sources of discrepancies. First, the exporter from China
may not know that the goods will eventually be shipped to the United States, and will list the
third party (e.g. Hong Kong) as its destination, but U.S. Customs will list the source of shipment
as being China. Second, the value of the shipment may change—with or without any actual
change in the goods—between its arrival in and departure from the third location. As a result, the
Chinese export value will be less than the U.S. import value.
Under-Invoicing
Some analysts believe that Chinese importers may intentionally under value imports from the
United States to lower the import tariff due on the shipment. In addition, some analysts believe
that Chinese exporters may intentionally under value exports to the United States to maximize
their net proceeds overseas for various tax and regulatory reasons. Due to the “hidden nature” of
under-invoicing, it is difficult to assess how much this may be contributing to the differences in
the trade data.
9
After adjusting for re-exports via Hong Kong, Fung, Lau and Xiong reduced the difference between the U.S. and
Chinese trade deficit for 2005 from $87.4 billion to $26.5 billion. Tong estimated that adjustments for re-exports
resulted in a $22 billion reduction in the trade balance difference for 2003.
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What’s the Difference?—Comparing U.S. and Chinese Trade Data
Implications for Congress
The release of the official U.S. annual trade figures has been frequently followed by expressions
of concern about the U.S. bilateral trade deficit with China. Peter Morici, a University of
Maryland professor, reportedly made the following comment on the 2007 U.S.-China bilateral
trade balance, “A gap in exports compared to imports creates a drain on demand for U.S. goods
that will push us into a recession.”10
China, however, does not accept the accuracy of the official U.S. figure for the Sino-U.S. trade
balance. In 2007, China’s Foreign Ministry spokeswoman, Jiang Yu, said, “Imbalances in ChinaU.S. trade are an objective fact, but this is also related to the two sides’ different statistical
methods.”11
Also, when considering means or actions designed to reduce the U.S. trade deficit with China, it
is useful to know which goods are the main sources of discrepancies between Chinese and U.S.
trade figures, and how important they are in the overall trade flow between the two nations, so
that “trade remedies” may be better targeted at the “problem.” According to this report, the main
problems appear to be in the trade figures for electrical machinery, machinery, and toys and
sporting goods.
For those causes of the differences resulting from data compilation—such as misidentification of
value or country of origin of imports—Congress may choose to appropriate additional funding for
the responsible U.S. agency and/or provide for training or assistance to China’s customs services.
In other cases, more detailed analysis of the trade data may be helpful in persuading China to
amend or alter its laws, regulations and policies pertaining to the import or export of goods to the
United States.
Selected Bibliography on the Differences Between
U.S. and Chinese Bilateral Trade Figures
Adjusted Estimates of United States-China Bilateral Trade Balances—An Update. K.C. Fung,
Lawrence J. Lau and Yangyan Xiong. June 2006. Stanford Center for International
Development, Working Paper No. 278
7
Since June 2010, China has maintained what it calls a “managed floating exchange rate regime” that allows its
(continued...)
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shipment may change between the date it leaves China and the date it arrives in the United States
due to changes in the exchange rate. Although the renminbi has appreciated against the U.S.
dollar over the last few years, exchange rate changes are not considered a major factor in the
discrepancy in the trade figures.
Non-Technical Explanations
Value Differences in Direct Trade
According to two joint China-U.S. studies (see “Joint China-U.S. Studies of Discrepancies”
below), about half of the merchandise trade discrepancy between U.S. imports from China and
Chinese exports to the United States—or eastbound trade—is attributable to changes in the values
of the export price in China and the import value in the United States for goods shipped directly
between the two countries. Part of the difference may be caused by mid-shipment transfers in
ownership resulting in the new owner adding a markup in the price. Another possible explanation
is intentional under-invoicing of exports (see below).
Under-Invoicing
Some analysts believe that Chinese importers may intentionally under-value imports from the
United States to lower the import tariff due on the shipment. In addition, some analysts believe
that Chinese exporters may intentionally under-value exports to the United States to maximize
their net proceeds overseas for various tax and regulatory reasons. Due to the “hidden nature” of
under-invoicing, it is difficult to assess how much this may be contributing to the differences in
the trade data.
Intermediation
Although estimates vary, most analysts agree that a large portion of China’s exports arrive in the
United States via a third party, Hong Kong being the most commonly identified location.8 The
intermediation of shipments raises two sources of discrepancies. First, the exporter from China
may not know that the goods eventually will be shipped to the United States, and may therefore
list the third party (e.g., Hong Kong) as its destination, but U.S. Customs may list the source of
shipment as being China. Second, the value of the shipment may change—with or without any
actual change in the goods—between its arrival in and departure from the third location. The joint
China-U.S. study of discrepancies in merchandise trade statistics determined that value
differences account for about half of the differences between Chinese and U.S. trade statistics.
(...continued)
currency to fluctuate within a restricted range on a daily basis. For a more detailed discussion of China’s exchange rate
policy, see CRS Report RS21625, China's Currency Policy: An Analysis of the Economic Issues, by Wayne M.
Morrison and Marc Labonte.
8
In a 2006 study, Fung, Lau and Xiong reduced the difference between the U.S. and Chinese trade deficit for 2005
from $87.4 billion to $26.5 billion by adjusting the trade data for Hong Kong re-exports. In a 2005 study, Tong
estimated that adjustments for re-exports resulted in a $22 billion reduction in the trade balance difference for 2003. In
an August 2013 study, Hammer, Jones, and Wang calculated that intermediation by third countries other than Hong
Kong accounted for much of the remaining differences between Chinese and U.S. trade statistics after adjustments were
made for valuation systems. See selected bibliography at end of report for complete citations of these studies.
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Joint China-U.S. Studies of Discrepancies
In April 2004, the 15th JCCT established a statistical working group, with representatives of
China’s Ministry of Commerce and General Administration of Customs, and the U.S. Department
of Commerce and Office of the USTR. The initial focus of the working group was to examine the
“unusually large and growing statistical discrepancies in the bilateral merchandise trade data
officially published by [the] two countries.”9 It was subsequently decided to conduct a
reconciliation study to determine the causes of the discrepancies. However, it was agreed that the
results of the study were not intended to imply errors in either nation’s statistical systems and/or
methods of calculating official merchandise trade data.
Under the auspices of the U.S.-China Joint Commission on Commerce and Trade (JCCT),
China’s Ministry of Commerce and the U.S. Department of Commerce and Office of the U.S.
Trade Representative (USTR) have conducted two studies to determine the causes of the
statistical discrepancies in the official merchandise trade data reported by both nations. The first
report was released in October 2009; the second in December 2012.
The main conclusions of the two studies are largely the same. The greatest discrepancy is in the
“eastbound trade” data, which accounts for 80%-90% of the overall difference in annual trade
balance. Roughly half of the “eastbound trade” data discrepancy can be attributed to goods that
“leave China, enter the commerce of intermediate countries or regions, and then [are] re-exported
to the United States.”10
Implications for Congress
The release of the official U.S. annual trade figures has been frequently followed by expressions
of concern about the size of U.S. bilateral trade deficit with China. According to official U.S.
trade figures, the bilateral trade deficit with China in 2014 was more than four times the size of
the next largest bilateral trade deficit (Germany, $73.7 billion) and greater than the sum of the
next seven largest bilateral trade deficits.11
China, however, does not accept the accuracy of the official U.S. figure for the Sino-U.S. trade
balance. In 2007, China’s Foreign Ministry spokeswoman, Jiang Yu, said, “imbalances in ChinaU.S. trade are an objective fact, but this is also related to the two sides’ different statistical
methods.”12
Also, when considering means or actions designed to reduce the U.S. trade deficit with China, it
is useful to know which goods are the main sources of discrepancies between Chinese and U.S.
trade figures, and how important they are in the overall trade flow between the two nations, so
9
Report of the Statistical Discrepancy of Merchandise Trade Between the United States and China, Hangzhou, China,
October 2009.
10
Ibid.
11
The next seven largest bilateral trade deficits in 2014, in order, were Germany—$73.7 billion; Japan—$67.0 billion;
Mexico—$53.8 billion; Canada—$33.9 billion; Saudi Arabia—$28.4 billion; Ireland—$ 26.2 billion; and South
Korea—$25.1 billion; for a total of $333.2 billion—$9.4 billion less than that of China.
12
Washington Trade Daily, February 16, 2007.
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What’s the Difference?—Comparing U.S. and Chinese Trade Data
that “trade remedies” may be better targeted at the perceived problem. According to this report,
the main problems appear to be in the trade figures for electrical machinery, machinery, and toys
and sporting goods.
For those causes of the differences resulting from data compilation—such as misidentification of
value or country of origin of imports—Congress may choose through oversight or other means to
encourage the responsible U.S. agency to examine and adjust its procedures for compiling trade
data. In addition, Congress may decide to press or otherwise encourage China’s customs services
to conduct a similar review of its trade compilation procedures. In other cases, more detailed
analysis of the trade data may be helpful in persuading China to amend or alter its laws,
regulations, and policies pertaining to the import or export of goods to the United States.
Selected Bibliography on the Differences Between
U.S. and Chinese Bilateral Trade Figures
“Accounting for Discrepancies in Bilateral Trade: The Case of China, Hong Kong, and the United
States,” by Michael J. Ferrantino and Zhi Wang, China Economic Review, vol. 19 (2008), pp.
502-520.
Adjusted Estimates of United States-China Bilateral Trade Balances—An Update. K.C. Fung,
Lawrence J. Lau and Yangyan Xiong. June 2006. Stanford Center for International
Development, Working Paper No. 278.
Methodology of U.S.-China-Hong Kong Triangular Merchandise Trade Statistic Reconciliation.
Alexander Hammer, Lin Jones, and Zhi Wang. August 2013. Office of Economics Research
Note, U.S. International Trade Commission, No. RN-2013-08A.
Report on the Statistical Discrepancy of Merchandise Trade Between the United States and
China, Report by the Joint Commission on Commerce and Trade Statistical Working Group,
October 2009.
The Second Phase Report on the Statistical Discrepancy of Merchandise Trade between the
United States and China, Report by the Joint Commission on Commerce and Trade Statistical
Working Group, December 2012.
Statistical Differences in Sino-US Trade Balance. February 12, 2007. China Online.
http://chinaculture.about.com/library/china/whitepaper/blstrade2.htm
The U.S.-China Bilateral Trade Balance: Its Size and Determinants. Robert C. Feenstra, Wen
Hai, Wing T. Woo, and Shunli Yao. May 1998. Paper presented at the UNDP-HIID
Conference on China’s Integration in the Global Economy, January 17, 1998.
The U.S.-China Trade Imbalance: How Big Is It Really? Sarah Y. Tong. March 2005. China: An
International Journal. Volume 3, No. 1, pp. 131-154.
10
David Goldman and Chris Isidore, “1st Annual Trade Gap Drop in 6 Years,” CNN Money, February 14, 2008.
11
Washington Trade Daily, February 16, 2007.
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What’s the Difference?—Comparing U.S. and Chinese Trade Data
Author Contact Information
Michael F. Martin
AnalystSpecialist in Asian Trade and FinanceAffairs
mfmartin@crs.loc.gov, 7-2199
Congressional Research Service
78