Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Lies, Damned Lies, and Chinese Statistics
Although it isn't clear that the Obama administration has taken it seriously, the Chinese government has clearly taken Paul Krugman's call for a 25 percent tariff seriously. On March 14th, Chinese Premier Wen Jiabao argued that efforts by the U.S. and Europe to get China to allow its currency to appreciate were protectionist. He also asserted China's commitment to balanced trade.
But all this depends upon what the meaning of balance is. The meaning of balanced trade with Chinese characteristics became clearer in an essay published by Chinese Vice Commerce Minister ZHONG SHAN in the Wall Street Journal during his visit to the US. When U.S. economists use the term balance of payments or balance of trade, what they are thinking of are measures like the current account deficit/surplus between countries. Not Chinese government officials, it would seem. In the article Zhong writes:
“In 2008, the total sales of American goods in the Chinese market, including goods exported from the U.S. to China, amounted to $224.7 billion, close to the value of goods China exported to the U.S. in 2008, which stood at $252.3. The two countries were almost balanced in terms of sales after adjustment for value-adding freight and insurance fees.”
Of course most of these “American” goods were manufactured in China by Chinese workers, mostly working in joint-ventures rather than purely American-owned companies… but I think I now understand what the Chinese mean when they say they are in favor of balanced trade. Balanced trade with Chinese characteristics occurs when China exports goods that the U.S. imports, and U.S. companies operating in China have Chinese workers produce goods that Chinese consumers then purchase.
There are also scattered rumors on the web that China is working to manipulate its trade surplus numbers for March to make the surplus smaller so as to take some of the pressure off. There are lies, damned lies, statistics... and then there are the numbers put forth by totalitarian states, which are in yet another class quite by themselves.
Journal of Economic Literature:
Atlantic Economic Journal: