Trade surplus with the US viewed from another angle

Influenced by "high export and low import" in the entire foreign trade since the beginning of the year, China's trade surplus has increased by a big margin. In the first half of the year alone, the accumulative total of trade surplus has exceeded the level of trade surplus in the whole of last year.

In the same period, China's trade surplus with the United States has reached US$49.1 billion, up 56.4 percent. The United States has replaced Hong Kong to become China's No.1 source of trade surplus. A conservative estimate shows that China's trade surplus with the United States may exceed US$100 billion this year.

The question of favorable balance of trade with the United States has all along been the focus of China-US economic and trade relationship. At present, China has for several consecutive years become the country having largest trade surplus with the United States.

According to China's customs statistics, the United States has since 1993 witnessed for the first time a US$6.3 billion worth of unfavorable balance of trade with China, the figure rose to US$80.3 billion in 2004, while in the same period, trade deficit based on US statistics climbed from US$22.8 billion in 1993 to US$162 billion in 2004. Despite statistical difference, it indicates that the amount of US unfavorable balance of trade with China is tremendous.

Trade deficit has provided US trade protection forces with a grand excuse. The US side is prone to either imposing anti-dumping on China, or demanding revaluation of the Renminbi (RMB) under the pretext of trade deficit. Many US businessmen claim that they have suffered great losses whenever trade deficit is mentioned.

As a matter of fact, in international trade, who suffers losses and who is benefited cannot be decided by only viewing pure barter trade. China's share in the US market is achieved mainly through barter trade, while the United States gains a market share in China mostly through investment and service trade.

Last year, the sales volume of US-funded enterprises in China reached US$75 billion, in addition to US$75 billion worth of exports. Among the US$150 billion worth of "cake", what the United States had gained were pure gold and silver.

The decisive factor for US deficit of trade with China is the transfer of international industries. Against the backdrop of the in-depth development of economic globalization, the relationship between investment and international trade tends to become closer. The acceleration of the shift of international industries has brought about a sharp increase in international investment, the overseas sales by transnational companies and their reselling to parent companies have increased enormously. While reaping investment returns, the United States, a big country in terms of overseas investment, has witnessed great amounts of deficits.

If it changes its statistical method and deducts the overseas net sales and exports of transnational companies, then US trade deficit may be greatly reduced or trade surplus may even be achieved.

According to a calculation worked out by the Chinese Ministry of Commerce, when US transnational companies' sales in China are deducted, then US deficit may drop greatly to about US$6 billion; when transnational companies' associated trade is deducted, then US deficit of trade with China will decrease by 30 percent; when China's processing trade or the surplus of foreign-funded enterprises are deducted, then China's surplus of trade with the United States may decrease by 91 percent and 73 percent respectively. When US deficits of trade with East Asian countries are converted into deficit of trade with China or deficit from hi-tech products to China, then it is, in fact, a result of the shift of international industries and of the vertical division of labor.

An indisputable fact is that deficit is only a representation of economic activities, it does not bring fundamental harm to the United States, the size of deficit is not an indication of whether or not the US economy is healthy, otherwise, the United States would have long before categorically adopted measures to reduce its huge amounts of deficit.

According to a survey conducted by the China-US chamber of commerce, nearly 80 percent of American-funded enterprises hold that they have gained a lot of profit or have been profited in China. Although the United States has deficit of trade with China, China's good and cheap products helped reduce US prices and enabled it to maintain a low rate of inflation and promoted the sound development of the US economy. Furthermore, China has spent a huge sum of US dollars to buy US government bonds, which has become one of the main methods for the United States to make up for its trade deficits.

To look at trade deficit and trade surplus dialectically, a balance of trade is always relative and dynamic. China-US economic and trade relationship is a win-win situation and not a zero sum, and economic complementarity predestines that US deficit of trade with China will be a long-term issue. From now on, participation in globalization and product-related division of labor will continue to deepen in extent, if the current statistical method is not changed, then US trade deficit with China will continue, and the scale of China-US trade will incessantly expand.

By People's Daily Online