US-China trade: Who is telling the truth?

Abstract

Econometric studies investigating the US-China trade have largely retrieved data from one side only, mainly the US. There is a considerable difference between what each partner claims to have actually traded with the other. In 2013, the US-reported trade deficit with China was $346.3 billion, while the figure stood at $215.7 billion according to China’s reports, which accumulates merely 62% of the former’s claim. To answer the question of which data source is more reliable for research purposes, we assess the dynamic magnitude of the discrepancy for the period 1984-2013 and review the causes behind it. Through grouping the causes into two categories based on the causative factors, this study concludes there is no enough evidence to trust the data of one side more than the other. We highly encourage more in-depth studies to reconcile the data. Researchers who still prefer to utilize unreconciled data are recommended to express more caution.