Connect with us
CGIF-10th-Year-Anniversary

China

Busting US-China Trade Deficit Myths

Public opinion in the United States has turned against free trade. Donald Trump’s election win was tied to an aggressive campaign promising to address trade imbalances, with a particular focus on Chinese trade practices

Avatar

Published

on

East West Bank CEO Dominic Ng sets things straight on trade figures that he calls outdated.

Public opinion in the United States has turned against free trade. Donald Trump’s election win was tied to an aggressive campaign promising to address trade imbalances, with a particular focus on Chinese trade practices.

On the campaign trail, Trump remarked that “China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable.”

Without doubt, there are problems in the U.S.-China trade relationship. However, the current officially reported U.S.-China trade numbers are grossly inaccurate. They are based on outdated methods of data collection and calculation that were agreed to in the aftermath of World War II, and they have not been properly updated to reflect today’s global economy.

It is concerning that world leaders are primarily relying on these misleading trade figures to make major decisions that have the potential to damage economies and create ill will among nations that heavily depend on each other for their prosperity.

Businessman signing or writing a document in front Industrial Container Cargo freight ship

“It is concerning that world leaders are primarily relying on these misleading trade figures to make major decisions.” Dominic Ng

Traditional trade data are outdated and tell a distorted story

Let me explain why the trade data our leaders are using is problematic. Statistics traditionally used to measure trade flows do not fully reflect the globalization of production chains.

Currently, statistical agencies pin the entire trade value of a product to the last place it was exported from, even though the parts in the product come from many other countries. This method of data collection is based on the International Monetary Fund’s Balance of Payments Manual, which was first released in 1948, and never appropriately overhauled to reflect the new complexities of global value chains.

In the case of China, this means that commonly cited trade figures are distorted by the fact that China has become a final assembly point for many goods that contain a significant number of parts from other nations.

The classic example is the Apple iPhone

Apple takes care of design, development, marketing, and software creation for its phones in the U.S. High-value components of the iPhone come from different countries: Among the myriad iPhone 6 parts, displays are manufactured in South Korea, Japan, and elsewhere; processors come from the United States; touch ID sensors are made in Taiwan; and barometric pressure sensors come from Germany. 

(This is the first editorial of a three-part series on the misunderstandings of the U.S.-China trade relationship.)

Source : Busting US-China Trade Deficit Myths

Comments

China

Thailand ready to ink big Chinese-backed trade deal

The RCEP will cover all 10 Asean member states plus five partners: China, Australia, Japan, New Zealand, and South Korea and will take effect from the middle of 2021 if at least six Asean members and three partners agree to its terms.

Olivier Languepin

Published

on

Thailand is set to sign the world’s biggest free trade agreement with Japan, China, South Korea and 12 other Asia-Pacific countries at the 37th Asean Summit this week.

(more…)

Continue Reading

Business

Great Wall Motor (China) takes over GM factory in Thailand

The Thai production hub will become operational in the first quarter of 2021 with automobile production capacity of 80,000 units per annum.

Avatar

Published

on

Chinese carmaker Great Wall Motor (GWM) hosted a ceremony on November 2nd to celebrate the latest milestone in taking full ownership of Rayong Manufacturing Facility in Thailand.

(more…)

Continue Reading

China

Thailand inks 50.6 Bn baht High Speed Rail deal with China

Thai Prime Minster said the project will help strengthen ties between Thailand and China, reflecting a mutual commitment to infrastructure development to help promote economic prosperity, connectivity, and relations between the people of Thailand and China.

National News Bureau of Thailand

Published

on

white electric train
Photo by David Dibert on Pexels.com

BANGKOK (NNT) – Thailand and China signed a rail construction, train procurement, and personnel training contract for a Bangkok – Nakhon Ratchasima High Speed Rail service on the northeastern line.

(more…)

Continue Reading

Cart

Latest

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,151 other subscribers

Trending