China-U.S. trade has been mutually beneficial, and the United States has reaped substantial benefits from bilateral economic and trade cooperation, China's Ministry of Commerce said Thursday in a research report.
"China-U.S. economic and trade cooperation has reached unprecedented depth and breadth," said the report, noting that bilateral goods trade surged from 2.5 billion U.S. dollars in 1979 to 633.5 billion dollars last year.
Bilateral trade in services exceeded 125 billion dollars in 2018, and two-way direct investment totaled nearly 160 billion dollars in the past four decades.
OVERSTATED U.S. DEFICITS
China's surplus come mainly from labor-intensive products, and the country saw deficits for products including aircraft, integrated circuits, automobiles and agricultural products, as well as in service trade, showing both countries have capitalized on their respective industrial advantages, it added.
"Strict control of the United States over exports to China is one of the important reasons for the trade deficit," the report read, adding that U.S. export control measures involve around 3,100 items in 10 categories, including mostly high-tech products.
If the United States liberalizes its export barriers against China to the same level as France, the U.S. trade deficit with China would narrow by a third, the report cited the analysis by U.S. Carnegie Endowment for International Peace.
According to the joint study of Chinese and U.S. commerce authorities, the U.S. goods trade deficit data has long been overestimated, with a 21-percent overstatement for 2015, the report said.
Calculated with this percentage, the U.S. side's goods trade deficit of 419.2 billion dollars last year was overstated by 88 billion dollars.
As nearly 53 percent of China's goods trade surplus from the United States came from processing trade, the actual U.S. deficit to China last year should be just 240.9 billion dollars, the report said.
To calculate trade deficit, trade in services should also be taken into account. Counting in cross-border service trade and service sales of affiliated institutions, overall U.S. trade deficit to China should be around 153.6 billion dollars, some 37 percent of U.S. figure for goods trade deficit to China, the report showed.
Although China had a trade surplus, the bilateral trade benefits both sides, and the argument that the United States is being taken advantage of does not hold water, the report said.
China is one of the fastest growing markets for U.S. goods exports, with an average annual growth of 6.3 percent from 2009 to 2018, the report said, adding that the cumulative growth for the period was 73.2 percent, much higher than the average growth of 56.9 percent for other markets of the United States.
The significance of China to the U.S. economy is also reflected in job creation. According to a report released by the U.S.-China Business Council in May 2019, U.S. exports to China supported more than 1.1 million American jobs from 2009 to 2018.
Moreover, 54 percent of China's goods trade surplus from the United States was generated by foreign firms and 53 percent of the surplus came from processing trade. China only earned from limited processing charges while the United States accumulated huge benefits from designing, parts supply and marketing, the report said.
By trading with China, the United States imported a huge amount of high-quality products at low prices, and therefore managed to keep comparatively low inflation and reduce its production costs, the report said.
In the Chinese market, the sales revenue of U.S. firms exceeded 940 billion dollars in 2017.
Of the number, the export sales in goods and services by U.S. firms to China stood at 153.9 billion dollars and 87.1 billion dollars respectively in 2017. The remaining large portion of sales revenue of 700 billion dollars was generated by U.S. firms investing in China, noted the report.
As for the inflow of Chinese funds to the United States, the number amounted to 1.37 trillion dollars by the end of 2017.
At the end of 2017, the Chinese investment in the United States stood at 155.8 billion dollars. China's holdings of U.S. Treasury bonds amounted to 1.18 trillion dollars, according to the U.S. Treasury Department.
The aggregate investment earnings of U.S. financial institutions as strategic investors or investors of Chinese financial institutions were around 32.6 billion dollars, according to Chinese data.
"The immense achievements in China-U.S. economic and trade cooperation result from the two countries' efforts to comply with the trend of the times, actively engage in economic globalization, and strengthen cooperation for mutual benefits," the report said.
Bilateral economic and trade cooperation could not have achieved so much if it benefited only one side at the sacrifice of the other, the report noted.
"Both countries should dedicate themselves to advancing economic and trade cooperation at higher level and with better quality, so as to benefit the two peoples and contribute more to the growth and prosperity of world economy," the report said.