South-Westerns' Economic News Summaries
How Big Is China's Trade Surplus? THAT Big?
Topic International Trade
Key Words Imports, Exports, and Trade Surplus

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Reference ID: A144374543
News Story

With a trade surplus that more than doubled since March of 2005, this new report will likely increase trade frictions between China and the United States. The new figures show that China's trade surplus with the rest of the world stands at $11.19 billion, second only to their record monthly trade surplus of $12.02 billion set last October.

The latest trade statistics released by China showed only totals for exports, imports, and the trade balance for March. It did not reveal details of trade by country or product. Exports increased 28.2 percent from last March to a total of $78.05 billion and imports climbed 21.3 percent, to 66.86 billion. Chinese textile and apparel exports have gained a lot of attention over the last year, but detailed Chinese trade data for January and February of 2006 showed that Chinese exports climbed rapidly for a wide range of goods, with cell phones and television sets showing especially large percentage gains.

Although precise statistics are not available in this latest report, China has been reporting that its exports to the United States exceed imports by three to one, while the U.S. estimates that China exports six times more material than it imports. The difference may arise from differing record keeping methods. The U.S. counts Chinese exports trucked from mainland China to Hong Kong for shipment to the U.S. as coming from China. Chinese officials count these same goods as exports to Hong Kong. China uses this simpler approach to release trade statistics more quickly, and also to mask the size of the Chinese trade surplus with the U.S. Instead, Chinese statistics show a large trade surplus with Hong Kong, which became a Special Administrative Region of China on July 1, 1997.

Questions
1.

How is a trade surplus computed?

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?
Source Keith Bradsher, "China's Trade Surplus With U.S. Surged in March", The New York Times Online, April 12, 2006.
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