China Center Chart Dive: New data reveal less severe trade imbalance between the US and China

Relying solely on traditional export, import, and trade balance statistics to assess bilateral trade is insufficient, as these data fail to differentiate between domestically generated and foreign-generated content in traded goods and services. For example, the entire value of an iPhone assembled in China and then shipped to the US is included in US-China import data, even though many of the device’s components were actually produced in Japan, Korea, and other countries. Similarly, many dresses imported into the US from Italy are made from Chinese-produced silk, but that silk’s value is not captured in conventional US-China trade data. Therefore, tracing out global value chains and counting up the value added at various stages of production in each country is necessary to truly understand the depth and dependencies of bilateral trade relationships. Fortunately, this kind of comprehensive analysis has recently been made possible using a dataset called the World Input-Output Database (WIOD).