Accounting for the China–US Trade Imbalance: An Ownership‐Based Approach

Yiping Xu, Guijun Lin and Huayu Sun

Review of International Economics, 2010, vol. 18, issue 3, 540-551

Abstract: This paper focuses on measuring the trade imbalance between China and the United States (US) within the framework of the ownership‐based approach. It extends the baseline model developed, respectively, by NAS, Julius, and BEA into a three‐country framework, consisting of the domestic economy, the foreign economy, and the rest of the world. The results of the study show that the non‐US foreign direct investment in China is mostly responsible for China's trade surplus with the US. As a result, China's ownership‐based trade surplus is surprisingly small relative to the conventional measure.

Date: 2010
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https://doi.org/10.1111/j.1467-9396.2010.00882.x

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