By Hongman JIN Statistics Department Customs General Administration People’s republic of China
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Transcript of By Hongman JIN Statistics Department Customs General Administration People’s republic of China
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Reasons for Discrepancies in China’s External Trade Statistics with
partners:the Particular Role of Processing
Trade
By Hongman JINStatistics DepartmentCustoms General AdministrationPeople’s republic of China
September 12, 2005
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11
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100
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400
500
600
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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Bill
ion
US
$
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Gro
wth
rate
Export I mportExport growth rate I mport growth rate
China's Trade Development, 1994-2004
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Major issues:
• Methodology and quality of Chinese trade statistics has attracted much attention
• Doubts on the validity of the data have been cast, because of the large discrepancies in trade statistics between China and major partners, in particular the US and EU
• Debates in trade negotiations
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Discrepancies in China-US TradeTable1. Westbound Trade (China Export - US Import, in billion US$)
1993 1995 1997 1999 2001 2003China Export 17 24.7 32.7 42 54.3 92.5US Import 31.5 45.5 62.6 81.8 102.3 152.4Discrepancy(Imp - Exp)
14.5 20.8 29.9 39.8 48 59.9
Discrepancy %(Imp- Exp)/Imp 46% 46% 48% 49% 47% 39%
Table 2. Eastbound Trade (US Export - China Import , in billion US$)
1993 1995 1997 1999 2001 2003US Export 8.8 11.8 12.9 13.1 19.2 28.4China Import 10.7 16.1 16.3 19.5 26.2 33.9Discrepancy(Imp - Exp)
1.9 4.3 3.4 6.4 7 5.5
Discrepancy %(Imp- Exp)/Imp 18% 27% 21% 33% 27% 16%
Source: China Customs, US Bureau of Census
Source: China Customs, US Bureau of Census
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Discrepancies in China-EU Trade Table 3. Westbound Trade (China Export - EU Import, in billion US$)
1993 1995 1997 1999 2001 2003China Export 11. 7 19. 1 23. 8 30. 2 40. 9 72. 2EU Import 23. 0 34. 4 42. 5 52. 9 68. 0 108.4Discrepancy(Imp - Exp)
11. 3 15. 3 18. 7 22. 7 27. 1 36. 2
Discrepancy %(Imp- Exp)/Imp 49% 44% 44% 43% 40% 33%
Table 4. Eastbound Trade (EU Export - China Import , in billion US$)
1993 1995 1997 1999 2001 2003EU Export 13. 3 19. 1 18. 7 20. 6 26. 9 45. 7China Import 14. 4 21. 3 19. 2 25. 5 35. 7 53. 1Discrepancy(Imp - Exp) 1. 1 2. 2 0. 5 4. 9 8. 8 7. 4Discrepancy %(Imp- Exp)/Imp 8% 10% 3% 19% 25% 14%
Source: China Customs, EUROSTAT
Source: China Customs, EUROSTAT
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Summary of the results of the reconciliation studies
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Reasons for discrepancies
• Impact of differences in methodology is small• CIF/FOB, Less than 10% of import value• Hong Kong re-export is the main reason for discrepanc
ies, Underestimation of goods to the US or EU via HK, Overestimation of China export to HK. HK’s re-export value has been used for the adjustment
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5.7
5.9
21.2
3.210.84.3
Direct Trade
Via HK(HK)
0.51.1
Via Other
Via
HK(C
N)
China-US Direct and Indirect
Trade Flows 1993
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HK Re-export Margin
• Large re-export margin added by HK makes the discrepancies more significant
• Estimation: unit value approach
1.
.
RX RX
I RX
UV Q
UV Q
• China-US eastbound trade : 40% ,1993
China-EU westbound trade: 35% ,1995
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Why does Hong Kong deal with large re-exports of Chinese goods?
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Survey by Hong Kong
Table 5. Estimated Proportion of Outward Processing TradeTrade Type 1993 1995 1997 1999 2001 2003Total export to mainland China 47. 9% 49. 0% 48. 1% 47. 5% 47. 5% 43. 9%Total Import from mainland China 73. 8% 74. 4% 81. 2% 80. 5% 78. 0% 71. 7%Reexport of mainland the China to other places 80. 8% 82. 2% 88. 4% 86. 6% 82. 2% 79. 4%soure: Hong Kong Census and Statistical Department
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China Processing Trade
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Inward Processing Trade(Processing Trade)
• Type I:
The imported inputs remain the property of the foreign supplier.
• Type II:
The ownership of imported inputs are transferred to Chinese producers, more commonly FIEs
• Benefits from duty exemptions• Value record: According to UN recommendation
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China's Processing Trade Development, 1994-2004
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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Bil
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S$
-5%0%5%10%15%20%25%30%35%40%
Gro
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Processi ng Export Processi ng I mport
Export growth I mport growth
Fast growth in recent years
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High Proportion of Total Trade
Proportion of Total ExportCustoms Regimes 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Processi ng Trade 47% 50% 56% 55% 57% 57% 55% 55% 55% 55% 55%Ordinary Trade 51% 48% 42% 43% 40% 41% 42% 42% 42% 42% 41%Other 2% 2% 3% 3% 3% 3% 3% 3% 3% 3% 4%
Proportion of Total ImportCustoms Regimes 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Processi ng Trade 41% 44% 45% 49% 49% 44% 41% 39% 41% 39% 40%Ordinary Trade 31% 33% 28% 27% 31% 40% 44% 47% 44% 45% 44%Other 28% 23% 27% 23% 20% 15% 14% 15% 15% 15% 16%
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FI Es i nvol ved i n the Processi ng Trade
0%
20%
40%
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80%
100%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Prop
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ExportI mport
Foreign Invested Enterprises play an important role
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Distributed in coastal areas
• Guangdong processes nearly half of the total products.
• Transfer trend in recent years
Guangdong
Jiangsu
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Concentrated in consumer products
Processing Products of 1994 and 2004HS2
M US$ Share M US$ ShareTL 56976 100% 327970 100%85 11558 20% 104702 32%84 3594 6% 95210 29%90 1171 2% 12695 4%62 6593 12% 11059 3%95 3849 7% 10329 3%39 1920 3% 7434 2%64 4766 8% 7017 2%94 1319 2% 6922 2%61 2854 5% 5579 2%86 612 1% 5333 2%42 2663 5% 3879 1%sub-TL 72% 82%
1994 2004
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Differences in country of origin of material and the final
destination marketImport
Taiwan P. 20%, Japan 18%, Korea 14%,
US 5%, EU %, HK 2%, Singapore 3%
Export
USA, 26%, EU 17%, HK 22%, Japan 13%
Korea 4%, Taiwan P. 2%, Singapore 3%
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Hong Kong’s Role
• Biggest supplier of Chinese FDI
• Investment mainly in Guangdong Province.
• Exports usually transported via Hong Kong
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A decreasing trend in reliance on Hong Kong in recent years
processing export via Hong Kong
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Total Processi ng exportProcessi ng vi a Hong Kongvi a Hong Kong rate
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A decreasing trend in trade statistics discrepancies
Di screpanci es i n %
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
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Chi na Export - US I mport
Chi na Export - EU I mport
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Debate in China
• Positive:
helps employment, updates manufacture capacity, contributes to GDP growth
• Negative:
labour intensive products, low added value, low salaries, creates environment pollution,
leads to trade conflicts
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• Hong Kong’s re-export of Chinese goods, in particular Chinese processing goods, is the major reason for discrepancies in China’s reported trade statistics with its major partners.
• An economic reality: the real expansion of Chinese foreign trade is due to the massive outsourcing schemes of foreign invested enterprises into the low-margin processing sector in China.
• Despite the decreasing trend in reliance on Hong Kong, the increasing scale of the processing trade means large discrepancies will still exist in the future.
Conclusion