Production-Driven and Non-Production-Driven Bilateral Trade Balance: Assessing Trade Deficits between the United States and China and the COVID-19 Epidemic

Huseyin Karamelikli, Serdar Ongan, Ismet Gocer and Mine Aysen Doyran

Chinese Economy, 2024, vol. 57, issue 2, 147-165

Abstract: This study aims to look deeper into the long-standing phenomenon of the United States’ large trade deficits with China by examining both countries’ bilateral trading structures (character). In this investigation, we, for the first time, redefine the traditional bilateral trade balance (BTB) ratio based on economic impact content as production-driven BTB (Xpd) and non-production-driven BTB (Xnpd). This is done because, while the former undergoes an economic activity within the United States, the latter doesn’t. The traditional ratio, i.e. total export/total import, doesn’t technically allow such an investigation. Hence, the proposed methodology of this study, using these two new forms of BTBs, may provide new perspectives to this phenomenon for U.S. policymakers. The main empirical finding may make it imperative to analyze the US BTB with China using the methodology proposed because the independent variables of the study’s models have different effects on Xpd and Xnpd. For example, while real depreciation in the USD improves Xnpd for 13 industries, the same change in the USD improves Xpd for only seven. Additionally, this methodology allows U.S. policymakers to compare/review the US BTB based on economic impact contents through Xpd and Xnpd separately. Last, it can be interpreted that the United States benefits from decreasing trade-policy uncertainty in the United States.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10971475.2023.2295638 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:chinec:v:57:y:2024:i:2:p:147-165

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MCES20

DOI: 10.1080/10971475.2023.2295638

Access Statistics for this article

More articles in Chinese Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().