China’s Ministry of Commerce is contesting recent media reports that China surpassed the U.S. as the world’s biggest trading nation in terms of volume last year. China Daily reports:
Recent data from the world’s two largest economies show that Chinese trade in goods and services reached $3.87 trillion in 2012, according to the General Administration of Customs, while the value of US exports and imports was $3.82 trillion, according to the US Commerce Department.
The ministry said, however, that China’s combined export and import volume from last year is below that of theUS when the same method of measurement is used.
A ministry official, who wasn’t identified, said on Wednesday the Commerce Department released two sets of figures for US trade last year: $3.82 trillion based on the country’s international balance of payments, and $3.882trillion based on a measurement similar to that used by the World Trade Organization. Only the smaller number was compared with China’s volume.
The official said the WTO’s annual trade report, which will be released within a month, will show a continued 1-2 ranking of the US and China.
At South China Morning Post, Tom Holland provides further details, explaining why reports that China is now the world’s biggest trading economy are wrong:
The most obvious way they are wrong is because China’s import and export numbers are heavily distorted by domestic companies fiddling their taxes.
Under mainland regulations, exporters of electronic gadgets and other widgetry can claim a value-added tax rebate worth 17 per cent of the goods’ value.
What’s more, under the Closer Economic Partnership Arrangement, no tariffs are charged on goods imported into the mainland from Hong Kong, provided the importer claims a relatively small component of value was added in the city.
As a result, mainland companies ship huge quantities of goods to Hong Kong, where their value is marked up by around 20 per cent before they are re-imported back into the mainland.[…]
A brief from The Economist looks at the numbers contested above, noting that even if they are accurate, the U.S. remains the global leader if services are included in the count:
[…]New figures show that America’s imports and exports of goods amounted to $3.82 trillion in 2012, compared with China’s $3.87 trillion (see chart). These figures count only trade in objects (ingenious or mundane). If services are added, America retains its lead for the moment. Tax dodges may also inflate China’s numbers, but its trade networks are spreading.[…]
Another recent piece on the topic from South China Morning Post notes that the Ministry of Commerce is also condemning recent U.S. sanctions on Chinese military firms for disrupting international trade norms:
Meanwhile, Beijing said the US was disrupting international trade by slapping sanctions on Chinese firms.
[…]In a separate report, Xinhua said Shen Danyang, a Ministry of Commerce spokesman, accused the US of disrupting the “normal order of international trade” and harming Chinese companies’ interest by imposing sanctions under its non-proliferation laws.
China urged the US to correct its “erroneous practice”, Xinhua said.
