Estimates of U.S.-China trade balances in terms of domestic value-added

Lawrence J. LAU, Xikang CHEN, Kwok Hon, Leonard CHENG, K. C. FUNG, Jiansuo PEI, Yun-Wing SUNG, Zhipeng TANG, Yanyan XIONG, Cuihong YANG, Kunfu Zhu ZHU

Research output: Working paperWorking paper seriesWorking Paper

Abstract

The U.S.-China bilateral trade balance in 2005 in terms of gross values of exports has been estimated by the U.S. Government to be US$201.6 billion, by the Chinese Government to be US$114.2 billion, and by Fung, Lau and Xiong (2006) to be US$172.3 billion. However, the domestic value-added generated by exports provides a more accurate measurement of the economic benefits to the exporting country than the gross value of exports. On the basis of a recent study by Lawrence Lau, et al, “The Estimation of Domestic Value-Added and Employment Generated by U.S.-China Trade,” the U.S.-China bilateral trade balance is estimated in terms of the total domestic value-added generated in each country by its exports to the other country respectively rather than the gross value of exports. It is found that in 2002, US$1,000 of Chinese exports to the United States would generate a direct Chinese domestic value-added, or Chinese GDP, of US$177 and an indirect Chinese domestic value-added of US$191, resulting in a total Chinese domestic value-added of US$386. It is also found that US$1,000 of U.S. exports to China would generate a direct U.S. domestic value-added, or U.S. GDP, of US$440 and an indirect U.S. domestic value-added of US$433, with a total U.S. domestic value-added of US$873. The domestic value-added content of U.S. exports to China is thus more than twice that of Chinese exports to the U.S. On the basis of these estimates of total domestic value-added content, and the adjusted export data compiled by Fung, Lau and Xiong (2006), an estimate of U. S.- China bilateral trade balance in 2005 in terms of domestic value-added would be US$39.6 billion in China’s favor.
Original languageEnglish
Place of PublicationStanford
PublisherStanford University
Number of pages26
Publication statusPublished - Oct 2006
Externally publishedYes

Publication series

NameStanford Center for International Development Working paper
PublisherStanford University
No.295

Fingerprint

trade balance
value added
China
exporting country
Values

Keywords

  • China
  • United States
  • Bilateral Trade Balance
  • Adjusted Estimates
  • Measuring Surplus

Cite this

LAU, L. J., CHEN, X., CHENG, K. H. L., FUNG, K. C., PEI, J., SUNG, Y-W., ... ZHU, K. Z. (2006). Estimates of U.S.-China trade balances in terms of domestic value-added. (Stanford Center for International Development Working paper; No. 295). Stanford: Stanford University.
LAU, Lawrence J. ; CHEN, Xikang ; CHENG, Kwok Hon, Leonard ; FUNG, K. C. ; PEI, Jiansuo ; SUNG, Yun-Wing ; TANG, Zhipeng ; XIONG, Yanyan ; YANG, Cuihong ; ZHU, Kunfu Zhu. / Estimates of U.S.-China trade balances in terms of domestic value-added. Stanford : Stanford University, 2006. (Stanford Center for International Development Working paper; 295).
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abstract = "The U.S.-China bilateral trade balance in 2005 in terms of gross values of exports has been estimated by the U.S. Government to be US$201.6 billion, by the Chinese Government to be US$114.2 billion, and by Fung, Lau and Xiong (2006) to be US$172.3 billion. However, the domestic value-added generated by exports provides a more accurate measurement of the economic benefits to the exporting country than the gross value of exports. On the basis of a recent study by Lawrence Lau, et al, “The Estimation of Domestic Value-Added and Employment Generated by U.S.-China Trade,” the U.S.-China bilateral trade balance is estimated in terms of the total domestic value-added generated in each country by its exports to the other country respectively rather than the gross value of exports. It is found that in 2002, US$1,000 of Chinese exports to the United States would generate a direct Chinese domestic value-added, or Chinese GDP, of US$177 and an indirect Chinese domestic value-added of US$191, resulting in a total Chinese domestic value-added of US$386. It is also found that US$1,000 of U.S. exports to China would generate a direct U.S. domestic value-added, or U.S. GDP, of US$440 and an indirect U.S. domestic value-added of US$433, with a total U.S. domestic value-added of US$873. The domestic value-added content of U.S. exports to China is thus more than twice that of Chinese exports to the U.S. On the basis of these estimates of total domestic value-added content, and the adjusted export data compiled by Fung, Lau and Xiong (2006), an estimate of U. S.- China bilateral trade balance in 2005 in terms of domestic value-added would be US$39.6 billion in China’s favor.",
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LAU, LJ, CHEN, X, CHENG, KHL, FUNG, KC, PEI, J, SUNG, Y-W, TANG, Z, XIONG, Y, YANG, C & ZHU, KZ 2006 'Estimates of U.S.-China trade balances in terms of domestic value-added' Stanford Center for International Development Working paper, no. 295, Stanford University, Stanford.

Estimates of U.S.-China trade balances in terms of domestic value-added. / LAU, Lawrence J.; CHEN, Xikang; CHENG, Kwok Hon, Leonard; FUNG, K. C.; PEI, Jiansuo; SUNG, Yun-Wing; TANG, Zhipeng; XIONG, Yanyan; YANG, Cuihong; ZHU, Kunfu Zhu.

Stanford : Stanford University, 2006. (Stanford Center for International Development Working paper; No. 295).

Research output: Working paperWorking paper seriesWorking Paper

TY - UNPB

T1 - Estimates of U.S.-China trade balances in terms of domestic value-added

AU - LAU, Lawrence J.

AU - CHEN, Xikang

AU - CHENG, Kwok Hon, Leonard

AU - FUNG, K. C.

AU - PEI, Jiansuo

AU - SUNG, Yun-Wing

AU - TANG, Zhipeng

AU - XIONG, Yanyan

AU - YANG, Cuihong

AU - ZHU, Kunfu Zhu

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N2 - The U.S.-China bilateral trade balance in 2005 in terms of gross values of exports has been estimated by the U.S. Government to be US$201.6 billion, by the Chinese Government to be US$114.2 billion, and by Fung, Lau and Xiong (2006) to be US$172.3 billion. However, the domestic value-added generated by exports provides a more accurate measurement of the economic benefits to the exporting country than the gross value of exports. On the basis of a recent study by Lawrence Lau, et al, “The Estimation of Domestic Value-Added and Employment Generated by U.S.-China Trade,” the U.S.-China bilateral trade balance is estimated in terms of the total domestic value-added generated in each country by its exports to the other country respectively rather than the gross value of exports. It is found that in 2002, US$1,000 of Chinese exports to the United States would generate a direct Chinese domestic value-added, or Chinese GDP, of US$177 and an indirect Chinese domestic value-added of US$191, resulting in a total Chinese domestic value-added of US$386. It is also found that US$1,000 of U.S. exports to China would generate a direct U.S. domestic value-added, or U.S. GDP, of US$440 and an indirect U.S. domestic value-added of US$433, with a total U.S. domestic value-added of US$873. The domestic value-added content of U.S. exports to China is thus more than twice that of Chinese exports to the U.S. On the basis of these estimates of total domestic value-added content, and the adjusted export data compiled by Fung, Lau and Xiong (2006), an estimate of U. S.- China bilateral trade balance in 2005 in terms of domestic value-added would be US$39.6 billion in China’s favor.

AB - The U.S.-China bilateral trade balance in 2005 in terms of gross values of exports has been estimated by the U.S. Government to be US$201.6 billion, by the Chinese Government to be US$114.2 billion, and by Fung, Lau and Xiong (2006) to be US$172.3 billion. However, the domestic value-added generated by exports provides a more accurate measurement of the economic benefits to the exporting country than the gross value of exports. On the basis of a recent study by Lawrence Lau, et al, “The Estimation of Domestic Value-Added and Employment Generated by U.S.-China Trade,” the U.S.-China bilateral trade balance is estimated in terms of the total domestic value-added generated in each country by its exports to the other country respectively rather than the gross value of exports. It is found that in 2002, US$1,000 of Chinese exports to the United States would generate a direct Chinese domestic value-added, or Chinese GDP, of US$177 and an indirect Chinese domestic value-added of US$191, resulting in a total Chinese domestic value-added of US$386. It is also found that US$1,000 of U.S. exports to China would generate a direct U.S. domestic value-added, or U.S. GDP, of US$440 and an indirect U.S. domestic value-added of US$433, with a total U.S. domestic value-added of US$873. The domestic value-added content of U.S. exports to China is thus more than twice that of Chinese exports to the U.S. On the basis of these estimates of total domestic value-added content, and the adjusted export data compiled by Fung, Lau and Xiong (2006), an estimate of U. S.- China bilateral trade balance in 2005 in terms of domestic value-added would be US$39.6 billion in China’s favor.

KW - China

KW - United States

KW - Bilateral Trade Balance

KW - Adjusted Estimates

KW - Measuring Surplus

UR - https://commons.ln.edu.hk/sw_master/1513

M3 - Working paper series

T3 - Stanford Center for International Development Working paper

BT - Estimates of U.S.-China trade balances in terms of domestic value-added

PB - Stanford University

CY - Stanford

ER -

LAU LJ, CHEN X, CHENG KHL, FUNG KC, PEI J, SUNG Y-W et al. Estimates of U.S.-China trade balances in terms of domestic value-added. Stanford: Stanford University. 2006 Oct. (Stanford Center for International Development Working paper; 295).