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Accounting for discrepancies in bilateral trade: The case of China, Hong Kong, and the United States

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  • Ferrantino, Michael J.
  • Wang, Zhi
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    Abstract

    China's reported exports to the United States have long been smaller than U.S.-reported imports from China. Earlier explanations for this focused on re-exports through Hong Kong, and appeared to account for most of the difference. Now, even after taking Hong Kong into account properly, there has emerged a new and growing discrepancy which amounted in 2005 to $46 billion, perhaps 20% of the "true" value. Comparisons of detailed customs records from China, Hong, Kong, and the United States show that direct exports from Chinese ports and Chinese exports through third countries account for much of the discrepancy, relative to trade flows involving Hong Kong. Transshipment and re-exports through Hong Kong seem no longer to be the major explanation of the discrepancies, especially in recent years. Adjustment for a likely double-counting between re-exports and transshipments make the estimated discrepancy for 2005 increase to $59 billion.

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    Bibliographic Info

    Article provided by Elsevier in its journal China Economic Review.

    Volume (Year): 19 (2008)
    Issue (Month): 3 (September)
    Pages: 502-520

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    Handle: RePEc:eee:chieco:v:19:y:2008:i:3:p:502-520

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    Web page: http://www.elsevier.com/locate/chieco

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    References

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    1. Andriamananjara, Soamiely & Arce, Hugh M. & Ferrantino, Michael J., 2004. "Transshipment in the United States," Working Papers 15871, United States International Trade Commission, Office of Economics.
    2. Fisman, Raymond & Wei, Shang-Jin, 2001. "Tax Rates and Tax Evasion: Evidence from 'Missing Imports' in China," CEPR Discussion Papers 3089, C.E.P.R. Discussion Papers.
    3. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
    4. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2006. "Transfer Pricing by U.S.-Based Multinational Firms," NBER Working Papers 12493, National Bureau of Economic Research, Inc.
    5. Gehlhar, Mark, 1996. "Reconciling Bilateral Trade Data for Use in GTAP," GTAP Technical Papers 313, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    6. Robert C. Feenstra & Gordon H. Hanson, 2004. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 3-35, 03.
    7. International Monetary Fund, 2005. "Outsourcing Tariff Evasion," IMF Working Papers 05/102, International Monetary Fund.
    8. K.C. Fung & LawrenceJ. Lau & Yanyan Xiong, 2006. "Adjusted Estimates Of United States-China Bilateral Trade Balances: An Update," Pacific Economic Review, Wiley Blackwell, vol. 11(3), pages 299-314, October.
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    Cited by:
    1. Ferrantino, Michael J. & Liu, Xuepeng & Wang, Zhi, 2012. "Evasion behaviors of exporters and importers: Evidence from the U.S.–China trade data discrepancy," Journal of International Economics, Elsevier, vol. 86(1), pages 141-157.

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