Accounting for Discrepancies in Bilateral Trade: The Case of China, Hong Kong, and the United States

48 Pages Posted: 12 Apr 2007

See all articles by Michael J. Ferrantino

Michael J. Ferrantino

Trade Policy Research Forum

Zhi Wang

U.S. International Trade Commission

Date Written: April 2007

Abstract

China's reported exports to the United States have long been smaller than U.S.-reported imports from China. Earlier explanations for this focused on re-exports through Hong Kong, and appeared to account for most of the difference. Now, even after taking Hong Kong into account properly, there has emerged a new and growing discrepancy which amounted in 2005 to $45 billion, perhaps 20 percent of the true value. Comparisons of detailed customs records from China, Hong, Kong, and the United States shows that direct exports from Chinese ports and Chinese exports through third countries account for much of the discrepancy, relative to trade flows involving Hong Kong. The extent of the problem varies markedly across sectors. Some robust correlates for the discrepancy relate to valuation issues, U.S. tariffs, and re-exporting through the United States itself. The estimated behavior of other potentially important influences is sensitive to the econometric specification employed.

Keywords: China, Hong Kong, trade data, re-exports, transshipment

JEL Classification: F10, F14

Suggested Citation

Ferrantino, Michael J. and Wang, Zhi, Accounting for Discrepancies in Bilateral Trade: The Case of China, Hong Kong, and the United States (April 2007). Available at SSRN: https://ssrn.com/abstract=979540 or http://dx.doi.org/10.2139/ssrn.979540

Michael J. Ferrantino (Contact Author)

Trade Policy Research Forum ( email )

13 Yucca Drive
Fredericksburg, VA Virginia 22405
United States

Zhi Wang

U.S. International Trade Commission ( email )

500 E Street, SW
Washington, DC 20436
United States

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