Accounting for Chinese Trade: Some National and Regional Considerations

Posted: 26 Aug 1996

See all articles by K. C. Fung

K. C. Fung

University of California at Santa Cruz

Multiple version iconThere are 2 versions of this paper

Date Written: May 1996

Abstract

China's trade has three features: high incidence of re- exports through Hong Kong, high degree of trade related to foreign investment, and large amount of "illegal" trade. Re-exports occur when imports to Hong Kong are consigned to a buyer in Hong Kong, who adds a markup, and exports the goods elsewhere without fundamentally changing the goods. Using U.S. data and accounting for re-exports, the U.S.- China trade balance has to be lowered by 35 percent. Foreign investments in China accounted for 45 percent of China's exports. Foreign investments include foreign direct investment (FDI) and foreign subcontracting. "Illegal" trade between China and Taiwan has been induced by Taiwan's "no direct trade" policy. Illegal trade such as smuggling and tariff evasion also affect China's trade with her other trading partners.

JEL Classification: F14, M40

Suggested Citation

Fung, K.C., Accounting for Chinese Trade: Some National and Regional Considerations (May 1996). Available at SSRN: https://ssrn.com/abstract=2725

K.C. Fung (Contact Author)

University of California at Santa Cruz ( email )

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United States
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