Classification and Statistical Reconciliation of Trade in Advanced Technology Products: The Case of China and the United States

Abstract

This study provides an objective overview of U.S.-China trade in advanced technology products (ATP). It examines the definitions and classification methods of ATP in the United States and China and illustrates a method to reconcile U.S.-China ATP trade data that combines the strengths of both countries' trade statistics, which appear to have been created to serve different purposes. Some Chinese classifications appear to be used to help inform and manage its broad industrial development strategy and often extend to products beyond those considered advanced technology products in the United States. The U.S. ATP classification is mainly for statistical monitoring purposes.

The U.S. trade deficit in ATP with the world and with China grew rapidly in recent years. China's increasing surplus of China in ATP trade since its WTO accession is concentrated mostly in information and communication technology, while the United States still enjoys sizeable surpluses in electronics and aerospace technology. More than 90 percent of the rapidly expanding ATP exports from China to the United States is processing trade, which is closely related to foreign direct investment (FDI) and special economic zones and areas. This is in contrast to non-ATP trade, where most of the growth in trade since China WTO accession has been carried out by private Chinese firms, not foreign firms. Various special economic zones and areas have largely hosted the rapid expansion of Chinese ATP exports.

There appears to remain a considerable technological gap between Chinese ATP exports and Chinese imports from the United States. Chinese ATP imports from the United States were dominated by large-scale, sophisticated, high-valued equipment and devices, while Chinese ATP exports to the United States were still mainly small-scale products or components in the low-end of the ATP value-added chain.

Keywords: trade and technology, advanced technology products, U.S.-China trade, processing trade, foreign direct investment, special economic zones

JEL Classification: F14, C81, F13, F23