Appendix 2
China’s Trade Data
In recent years, attention has focused on differences in the figures reported for China’s trade
surplus by China and by its trading partners. Over the past decade, Chinese-reported trade data
shows lower Chinese global trade surpluses than the data on the total trade deficit with China
reported by China’s trading partners. For example, in the data set used for this analysis China’s
trade in goods surplus was $423.3 billion, but was $116.5 billion in 2005 according to Chinese
data.1 Much of this discrepancy is due to differences in destination country assignment in
Chinese and partner country trade data. Two adjustments, described below, to make Chinese and
partner country trade data comparable eliminate most, but not all, of the discrepancy.
Several important adjustments are needed to make Chinese and partner country trade data
comparable, namely for the transshipment of goods through Hong Kong and inclusion of
shipping charges.2 When these adjustments are made, discrepancies between the bilateral trade
data of China and its trading partners are greatly reduced. In 2005, making these two
adjustments reduces the discrepancy between what China reports as its global trade surplus and
what partner countries report from $307 billion to $91 billion.3
The fact that discrepancies remain after this adjustment is not surprising. Importantly, remaining
discrepancies cannot be attributed as errors by either of the trading partners. A country’s trade
data differs from its partner country’s data for a variety of reasons.4 Differences in the
classification of goods, timing, exchange rate fluctuations, geographic coverage and other factors
result in data sets that vary with one another. Additionally, in countries with closed capital
accounts such as China, it is common for asset holders to find ways to circumvent controls by
using over- and under-invoicing of trade transactions to move capital across borders, which can
skew the recorded trade statistics.