The value of China-US trade reached 263 billion US dollars last year; and China had a surplus of 144 billion US dollars. Commerce minister Bo Xilai summarized the trade imbalance in a vivid, accurate way: "Surplus with China, but profit with the US."

Why did most profits go to the US when China had a huge surplus? This is due to the following features in China-US trade:

Firstly, trade relations are more complementary than competitive – from which the US benefits more. According to China' s customs, from 1996 to 2003, China' s trade surplus to the US was 229 billion US dollars. Morgan Stanley statistics revealed that during this eight year period, Chinese products of high quality and low price not only saved 600 billion dollars for American consumers; but also helped US manufacturers reduce costs and control inflation.

Secondly, China' s trade with the US is largely processing in nature. More than 50 percent of China' s foreign trade is processing trade, which made up 63.3 percent of the nation' s products exported to the US last year (worth 204 billion US dollars).

The Washington Post ran an article on August 26 by Susan Shirk, former Deputy Assistant Secretary of State, who was in the Bureau of East Asian and Pacific Affairs. In the article she reports that nearly two-thirds of Chinese exported commodities are produced as foreign brands by foreign-funded enterprises—chiefly Japanese and US enterprises. For each Barbie doll priced at 20 US dollars, only about 35 cents stay in China. MIT professor Huang Yasheng pointed out that although China takes a salary advantage in globalization; it has failed to retain the profits brought in by globalization.

Thirdly, US investment in China exceeds China' s investment in the US. By the end of 2006, the US' s actual direct investment in China had surpassed 54 billion US dollars; while the figure for China' s investment in the US was a meager amount of 957 million US dollars – 1.8 percent of the former. More than 50,000 US-funded enterprises in China gain profits by "killing three birds with one stone." An analysis by relevant US institutions said that of the gross sales of US-funded enterprises in China in 2003, 71 percent came from the Chinese market; 11 percent came from products sold back to the US; and 18 percent were exports to other countries and regions. In 2006, US-funded enterprises reaped 80 billion US dollars in sales from the Chinese market, including a profit of 10 billion US dollars.
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