In globalized economy, trade hard to count
- By Lin Liyao
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China.org.cn, November 1, 2011
'Made in one country' becomes 'made in the world'
In the globalized economy, "made in one country" has become "made around the world". But traditional trade statistics overestimate the trade volume of countries with large assembly sectors, including parts imports and the full value of exported final products.
The methods do not reflect the production chain. Yu Jianhua, vice minister of commerce, said that based on the current "rules of origin," the "made in" label goes to the assembly country that exports the final products, with no credit given to the various parts manufacturers that add most of the product's value. Take Foxconn's iPad plant in Chengdu. Although the core parts for the tablet are produced in other countries, it is labeled as "made in China" because that is where it is put together.
China's processing trade was worth US$740.3 billion in 2010. Foreign companies accounted for 55 percent of all exports, but Chinese factories only pocketed a fraction of the money as profits.
Current statistics overstate China's trade surplus with a number of countries, providing an excuse for foreign politicians who want to pressure the Chinese government to reform trade and exchange rate policies.
Statistical methods reform underway
Yu, of the Ministry of Commerce, said traditional trade statistics should be reformed to keep up with the globalization of production. Currently, reform is under way at many organizations including the WTO, World Bank, United Nations Conference on Trade and Development, and the Organization for Economic Cooperation and Development. The European Union, Japan, Sweden and other countries have also begun to research this issue.
The WTO has launched a "Made in the World" initiative to support the development of techniques measuring and analyzing trade in terms of value added. Yu said China supports the initiative and will promote trade statistics reform.
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