IMPORTANT:For release .
For more information please contact:
Bruce C. Walter (301) 457-2210
Diane C. Oberg (301) 457-3251
The Bureau of the Census, Department of Commerce, announced today the completion
of a study of differences between the 1992 and 1993 merchandise trade statistics
of the United States and the People's Republic of China. The study was conducted
jointly with China's Ministry of Foreign Trade and Economic Cooperation
(MOFTEC) and China Customs.
This study grew out of the fact that the foreign trade statistics published
by each country display unusually large discrepancies. Each country's import
statistics are consistently greater than the other's exports. Through 1992,
the United States and China each reported a deficit with the other. In 1993,
although both countries showed a Chinese surplus, the reported values of
that surplus differed by over $16 billion:
China-U.S. Bilateral Trade Statistics
1988-1993
(value in millions of dollars)
Reported by China |
Reported by the United States | |||||
Exports |
Imports |
Balance |
Imports |
Exports |
Balance | |
1988
1989
1990
1991
1992
1993 |
3,380
4,410
5,180
6,158
8,594
16,965 |
6,631
7,863
6,588
8,008
8,900
10,687 |
-3,251
-3,453
-1,408
-1,849
-306
6,278 |
8,511
11,988
15,224
18,969
25,728
31,535 |
5,010
5,755
4,806
6,278
7,418
8,767 |
-3,501
-6,233
-10,418
-12,691
-18,310
-22,768 |
This release summarizes the findings of the joint study. The results do
not represent revisions or corrections to either country's published trade
figures.
The study found that the primary cause of the bilateral
discrepancies is the large amount of U.S.-China trade that is shipped through
Hong Kong and other intermediaries. Both nations follow international guidelines
in their published trade statistics, but these guidelines create some inconsistencies
between counterpart import and export statistics. Most importantly, imports
are attributed to the country where the goods were produced, and exports
are attributed to the last country of destination known at the time of export,
which may not, in fact, be the final country of destination. For example,
for eastbound trade, many of the goods shown by the United States as imports
from China are shown by China as exports to Hong Kong. Since many of China's
exports are shipped through Hong Kong, China's export statistics are much
less than U.S. import statistics.
Eastbound Trade (China exports, U.S. imports)
Eastbound trade (China's exports, U.S. imports) was the main focus of the
study, because eastbound trade is much greater than westbound trade and
shows much larger differences. China's published exports were only about
one-third of U.S. published imports for the years 1990-1992. The data were
adjusted for the conceptual differences between U.S. imports and Chinese
exports (such as China's reexports and the treatment of imports into Puerto
Rico and the U.S. Virgin Islands). However, the effect of these adjustments
(other than shipments via intermediaries) was quite small.
Trade Via Intermediaries
About 80 percent of U.S. imports from China travel via intermediaries, with
Hong Kong accounting for all but 3-4 percent of intermediary trade. Chinese
goods exported via Hong Kong could either be imported and later reexported
by Hong Kong (where they may have undergone some further processing), or
else just shipped through without Hong Kong ever taking actual possession.
International guidelines recommend that imports be attributed to the country
of origin, defined as the country in which the goods were produced. Hence,
the United States attributes to China all Chinese goods that are reexported
from or simply shipped through Hong Kong. There are no international rules
for determining when a good has been "substantially transformed,"
at which point its country of origin would change. Thus, it is possible
that some goods attributed to China might equally well be attributed to
an intermediary.
The international guidelines also call for exports to be attributed to the
last destination known at the time of export (the "ultimate destination").
For many of China's exports, the last destination known at the time of export
is Hong Kong, to which the exports are attributed. China worked with its
exporters to improve the reporting of the country of ultimate destination
for goods shipped through Hong Kong. This effort significantly increased
China's reported exports to the United States in 1993, as illustrated in
the graph above. The earlier years' data have not been adjusted for this
reporting change, so the trend can be misleading.
Estimating Total Eastbound Trade
The study estimated total eastbound trade by combining China's direct export
trade with estimates of trade via intermediaries derived from the official
statistics of Hong Kong and the United States. As the graph shows, trade
involving intermediaries could explain virtually the entire difference in
the statistics.
EXPLANATION:
U.S. U.S. imports adjusted for conceptual
differences
A Total eastbound
trade estimated using U.S. data
B Total eastbound
trade estimated using Hong Kong data
China China exports adjusted for conceptual differences
Hong Kong Reexport Margin
International guidelines recommend that the value of an imported good be
attributed to the good's country of origin. Goods exported by China to Hong
Kong for reexport to the United States increase in price, sometimes because
of minor processing in Hong Kong, sometimes as a simple price mark-up. The
United States, following international guidelines, reports the entire value
of these goods as imports from China, even though the value includes the
Hong Kong mark-up. The study estimated that about
29 percent of the value of Chinese goods reexported by Hong Kong to the
United States consisted of Hong Kong's mark-up. This is equivalent to a
41 percent increase in the value of the Chinese goods when imported by Hong
Kong. This mark-up would not, however, apply to goods that simply transit
Hong Kong.
Summary of Eastbound Trade
The study found that shipments of goods via Hong Kong and intermediary countries
most likely account for the large difference between the statistics of China
and the United States and that other conceptual and definitional differences
have little net effect.
It is likely that the trade statistics of the two countries will continue
to differ. Not only is the final destination frequently unknown at the time
of exportation from China, but the U.S. import value includes the value
added in the intermediary. There were also differences in the methods used
to determine country of origin.
Westbound Trade (U.S. exports, China imports)
Westbound trade, which is much smaller in volume, showed a much smaller
discrepancy, in both absolute and percentage terms, than did eastbound trade.
There were certain conceptual differences for which significant adjustments
were made, such as insurance and freight costs (included in China's imports,
but not U.S. exports), the treatment of some aircraft (excluded by China,
included by the United States) and automobiles for the personal use of foreigners
in China (excluded by China, included by the United States). However, the
net effect of these conceptual differences was small.
Estimating Total Westbound Trade
About 25 percent of China's imports from the United States travel via Hong
Kong or other intermediaries. The United States reports many of these goods
as exports to Hong Kong, the last known country of destination at the time
of export. The study estimated total westbound trade by combining the United
States' direct exports to China with estimates of trade via intermediaries
derived from the official trade statistics of China and Hong Kong.
EXPLANATION:
China China imports adjusted for conceptual
differences
A
Total westbound trade estimated using Chinese data
B
Total westbound trade estimated using Hong Kong data
U.S. U.S. exports adjusted
for conceptual differences
Summary of Westbound Trade
The differences between Chinese import and U.S. export statistics appear
to result largely from shipments via Hong Kong and other intermediaries,
although the amount of such trade is not as large as in the eastbound direction.
The conceptual differences, such as shipping cost, are also typical differences
between import and export statistics. The study could not quantify the mark-up
in Hong Kong for westbound trade.
Future Plans
The agencies involved have agreed to continue the study with an investigation
of 1994-1995 data and to attempt to study the sources of discrepancy in
more depth.
For further details:
A more detailed report on this study is available from the Foreign Trade
Division, U.S. Bureau of the Census, Washington, DC, 20233, (phone (301)
457-3251, fax (301) 457-2645) or from Internet http://www.census.gov/foreign-trade/www/
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