Re-balance Of Sino-US Trade:A View On Value Added Trade

The Sino-U.S. bilateral trade imbalance has always been focused. This paper takes the view of global value chain and value-added to further study the re-balance of Sino-U.S. trade.First, we use statistics to analyze the total quantitative and structural imbalance of sino-U.S. trade, then we decompose from trade mode and factor intensive manufacturing to find that processing trade and foreign direct investment are the decisive factor leading to huge US-China trade deficit, especially in high technology industry where China seems to have a huge rise on technology intensive.Second, we use the value added in trade method to calculate the export, import and trade balance between China and US. It turns out the trade deficit narrows as in the form of value added calculation compared to the tradition gross export way. This means that in some extent, value added in trade can draw the realistic picture of US-China trade and better reflect the value chain of both countries in global economy. However, the value added in trade method also reflects that the relative ratio of high-technology manufacturing shrinks sharply as a result of division in global value chain.Third, from a global perspective, this paper uses WTO/OECD Tiva database to analyze local value-added rate of change in China on the world export trade, the internal technical structure of China’s foreign trade partners and the technological structure inside manufacturing. We find that the domestic value-added share has a clear industry characteristics. And from a global perspective, although the total value of Sino-US trade surplus has shrunk, the relative position of the U.S. import and export in China is increasing. Although China’s export manufacturing sector as a whole contains a relative high rate of technically intensive product, the essence is not different from exporting toys, clothing and other labor-intensive products. China’s position in the global production networks still depends on low value-added natural factor endowments, there remains little comparative advantage to create higher value-added content.Finally, we select Information and Communication Technology industry as a case to further study the detailed product imbalance of Sino-U.S. trade. This includes study on revealed comparative advantage inside the industry, as well as flows of supply and demand conditions of final and intermediate products. This leads to East Asian Regional production networks and from some extent, Sino-US trade imbalance is fundamentally trade imbalance between US and East Asia, with China’s gradual integration into the global production network, replacing Japan and consolidating its final status of product, engagement in processing, assembly and other labor-intensive processes.