The United States-China bilateral trade balance may overstate the trade gap if:

Question

Quizplus · Accepted Answer

The United States-China bilateral trade balance may overstate the trade gap if some of the inputs used to produce Chinese exports are imported. This is because the trade balance only looks at the value of goods and services that are exported and imported, without considering the source of the inputs used in production. If Chinese exports contain imported inputs, the value of those inputs is counted as Chinese exports even though they are not domestically produced in China. This can lead to an overstatement of the trade gap between the two countries.

The United States-China Bilateral Trade Balance May Overstate the Trade