1. How is a trade surplus computed?

A trade surplus between countries is computed by determining the value of exports to a given country and subtracting the value of imports from the same country. When that value is positive (exports exceed imports) a trade surplus exists.

2. What is the advantage to China to report a ratio of exports to imports of three to one as opposed to the U.S. figures of six to one?

The growing trade surplus is gaining much attention in the U.S., with many officials calling for protectionist measures against China. They argue that small U.S. businesses, in particular, have trouble competing with the cheap goods produced in countries like China-a country that is infamous for disregarding fair trade practices. It is politically expedient on the world stage for China to show the smaller export to import ratio. China's ploy of exporting to Hong Kong first is a fairly transparent ploy to minimize the impact of this huge trade imbalance.

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