Trade surplus or false alarm(2)

China is not only the biggest exporter to the US, but also the fastest-growing market for US exports. China was the 11th largest market for American exports in 2000, but it became the third largest in 2007, that is, it jumped eight places in just seven years. According to statistics from the US-China Business Council, US exports soared 465 percent between 2000 and 2010, while the average increase in US exports to other trade partners was only 56 percent.

According to the October 2010 blueprint of the US Department of Commerce, which aims to double exports to its top 10 markets in five years, American exports to Canada and Mexico on average will increase by only 2.4 percent and 3.7 percent a year, while those to China will increase by 16.7 percent. (Actual US exports to China increased by 32 percent in 2010.) Therefore, it is obvious that US President Barack Obama's plan to double US exports in five years cannot be realized without the huge Chinese market.

The US should calculate how many US jobs its exports to China help maintain and/or create to realize that the benefits of bilateral trade far outweigh the drawbacks.

With the robust growth of bilateral trade, US investments in China have increased (and are increasing) fast. From 1980 to late June 2011, the US' real investment in China reached $66.9 billion and US capital funded more than 60,000 enterprises in the country.

A survey conducted by the American Chamber of Commerce in China shows that the profit of 85 percent of American enterprises in China increased in 2010. Besides, about 40 percent of the products China exports to the US are made by American companies in China. That is to say, these companies' exports are calculated as part of China's trade and go on to make China's trade surplus, whereas the profits are pocketed by American entrepreneurs and remitted back to the US. But the US government and Congress always use the trade surplus as an excuse to pressure Beijing to revaluate the yuan further against the dollar.

Perhaps it is time Chinese scholars figured out how much damage the US financial crisis has caused to the Chinese economy.

The author is a senior researcher at the Center for US-China Relations, Tsinghua University. The article first appeared in the Global Times.