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NPR's Marketplace did a story on this recently and it turns out that there are some tricks they play that, if properly accounted for, indicate that China is not

NPR's Marketplace did a story on this recently and it turns out that there are some tricks they play that, if properly accounted for, indicate that China is not the world's largest trading nation. http://www.marketplace.org/topics/world/paper-chinas-trade-surpasses-us-lets-get-real http://www.marketplace.org/topics/world/paper-chinas-trade-s...

yapcguy 13y ago
If you believe that China, or Chinese corporations, play accounting tricks, would you accept that all countries and all corporations play tricks to boost their figures too? We know for a fact that Starbucks, Google, etc perform accounting tricks to shift sales from the UK to Ireland. In the end, doesn't this all trickery cancel each other out, meaning that the rankings are a fair reflection?
- craftsman 13y ago
  I'll let the accountants and economists weigh in on that. But I'd rather rely on data than the argument "they all play accounting tricks therefore it must all cancel out". In other words, I'd like to see a similar analysis of the US's trade numbers and see if the resultant 'trickery' adjustment results in a significant shift in the trade numbers.
- afterburner 13y ago
  Do I have to accept that China and all other governments are exactly the same in order to accept this?
- skwirl 13y ago
  It's possible, but the argument that Starbucks/Google shifting sales from the UK to Ireland implies that the United States is playing accounting tricks with imports and exports is non sequitur. And the implicit assertion that if all countries were playing tricks, they must be playing it equally enough to cancel each other out is also not valid without providing additional supporting evidence. The article provides an estimate that 1/3rd of Chinese imports were from China itself. I have never heard any kind of claim of that magnitude leveled against the present United States.
  - iaw 13y ago
    This is a more articulate and well-thought out than I could have crafted, but it expresses my sentiment perfectly. The one point I'd like to add is that China incentivizes their companies to export through tax rebates and then incentivizes imports from HK through the absence of tariffs. The makes it profitable for companies to artificially boost exports. I have not seen similar mechanisms available in the US.
    - monsterix 13y ago
      That's a very interesting observation. It's important to note that China does have a dual system of Governance within itself: Democracy (Hong Kong) + Communist control (Mainland). Thus it can, and does, leverage best of both worlds to doing business efficiently. This also means that Hong Kong, for a city, is in a very strong position to grow up into a cutting edge city of future given the volumes it has to handle for mainland China.
- InclinedPlane 13y ago
  No, it doesn't all cancel out. China today is basically China, Inc. The people in charge of every aspect of the government are heavily motivated to manipulate this sort of data, just the same way as they try to cover up the pollution in their major cities. In contrast the economies and political systems in the US, Europe, etc. are far more open and not as easily vulnerable to this type of manipulation.
  - yapcguy 13y ago
    Why do (some) people still assume that anything coming out of China and Russia must be bad and viewed with suspicion? How about LIBOR rigging? Or traffic lane closures to spite political opponents? If anything you could argue manipulation in the US and Europe is far more sophisticated than China. For example, there's manipulation in plain sight: focus on the U-3 unemployment number rather than the U-6, never mention the labor participation rate where 92 million people in the US have given up looking for work. And look at the news in the UK newspapers today: The corruption of Britain: UK’s key institutions infiltrated by criminals Secret report shows how organised crime infiltrated judicial system as well as police with prison service and HM Revenue & Customs also compromised. http://www.independent.co.uk/news/uk/home-news/the-corruption-of-britain-uks-key-institutions-infiltrated-by-criminals-9052617.html http://www.independent.co.uk/news/uk/home-news/the-corruptio...
    - InclinedPlane 13y ago
      Tu quoque? Yeah, there's corruption in the US/Europe/Japan et al, but that level of corruption is dwarfed by the deeply systemic corruption up to the highest levels in China and Russia, among other places. The fact is you can't even tell what China's GDP is within a factor of maybe +/- 50% due to that corruption.
    - deleted 13y ago
      [deleted]
w1ntermute 13y ago
According to this article[0], most of their economic numbers are severely distorted by manipulation. 0: http://www.theage.com.au/business/china/is-george-soros-betting-against-china-20140110-30l8c.html http://www.theage.com.au/business/china/is-george-soros-bett...
jrs99 13y ago
is this like saying China is being unfair by hacking into our stuff?
ChuckMcM 13y ago
The interesting thing about world trade though is that even if China mis-reports other countries do not. You can sum the Chinese imports reported by countries you trust and get some guesses around how much distortion is in the Chinese "official" numbers. But doing so misses the point. Unlike internal metrics, which have been abused for centuries to give outsiders an impression of greater strength, trade metrics are much harder to "fake." You can, if you choose to, create fake businesses in countries around the world and have them report importing non-existent goods (and pay taxes and duties on those goods!) to give the appearance of a larger trade than you have, but at these magnitudes 3 - 4 trillion it just isn't feasible to fake any more. So the real story isn't whether or not China is the worlds "largest" trader of goods, but that it is even arguable compared to the US economy is something of an "oh crap" moment in terms of global geo-politics. Economies are power. If you have the largest economy you are the most powerful nation because if push came to shove, you can out produce a lesser economic power and win a war of attrition. Going to be a very interesting century.
- alexeisadeski3 13y ago
  >Economies are power. If you have the largest economy you are the most powerful nation because if push came to shove, you can out produce a lesser economic power and win a war of attrition. If that were true, China would be on similar footing to the US, militarily. But it's not. Not even close. I'll grant that given equal military spending, China would catch up to the US eventually, but it would probably take a decade or three. That's a decade or three of equivalent military spending. And right now China isn't spending anywhere near the US rate.
  - asdkl234890 13y ago
    >but it would probably take a decade or three. That is seems like very long. Why would it take three decades?
    - alexeisadeski3 13y ago
      It takes a long time to design and build modern aircraft carriers, then you've got to develop the doctrine and good habits to put all of it to use. The modern world isn't WWII, when you could just throw some aircraft up there and let them shoot it out. Modern aircraft combat amplifies even small differences in ability; a squadron of F-22's might shoot down a squadron of F-15's before the F-15's diagnostics and support could even spot them. I've read anonymous anecdotes of US vs UK wargames in which the last gen US fighters (pre-F22) would wipe out all of the UK aircraft before being detected. Anonymous anecdote, but still. The US also has decades of anti-guided and anti-ballistic missile research and experience. Sure the pure technology can be copied quick, but deploying it to your sea fleet and again developing the proper doctrine and support systems for actually using the stuff takes time. I'm not familiar with the Chinese submarine situation, but the US takes that area very seriously as well. And the problem is that you've got to be strong on all three fronts. Losing largely on any one - surface ship, air combat, submarine - means that your entire fleet may be sent to the bottom of the sea in mere hours... or minutes. Note that the Chinese military leaders understand this, and are focusing their efforts on asymmetric defensive warfare - at least as pertains the US. 'Carrier killer' missiles, sufficient numbers of cruise missiles to overwhelm US naval defenses, submarines. These are relatively cheap and enough to keep the US off China's back (indeed the US is rumored to be keeping all carriers far far away from Chinese coastlines due to the carrier killer) - but it's not enough to achieve anything like parity. Of course I'm just an armchair guy on the internet. I don't have any inside knowledge, just what I've gathered in my reading.

yapcguy 13y ago

If you believe that China, or Chinese corporations, play accounting tricks, would you accept that all countries and all corporations play tricks to boost their figures too? We know for a fact that Starbucks, Google, etc perform accounting tricks to shift sales from the UK to Ireland. In the end, doesn't this all trickery cancel each other out, meaning that the rankings are a fair reflection?

craftsman 13y ago
I'll let the accountants and economists weigh in on that. But I'd rather rely on data than the argument "they all play accounting tricks therefore it must all cancel out". In other words, I'd like to see a similar analysis of the US's trade numbers and see if the resultant 'trickery' adjustment results in a significant shift in the trade numbers.
afterburner 13y ago
Do I have to accept that China and all other governments are exactly the same in order to accept this?
skwirl 13y ago
It's possible, but the argument that Starbucks/Google shifting sales from the UK to Ireland implies that the United States is playing accounting tricks with imports and exports is non sequitur. And the implicit assertion that if all countries were playing tricks, they must be playing it equally enough to cancel each other out is also not valid without providing additional supporting evidence. The article provides an estimate that 1/3rd of Chinese imports were from China itself. I have never heard any kind of claim of that magnitude leveled against the present United States.
- iaw 13y ago
  This is a more articulate and well-thought out than I could have crafted, but it expresses my sentiment perfectly. The one point I'd like to add is that China incentivizes their companies to export through tax rebates and then incentivizes imports from HK through the absence of tariffs. The makes it profitable for companies to artificially boost exports. I have not seen similar mechanisms available in the US.
  - monsterix 13y ago
    That's a very interesting observation. It's important to note that China does have a dual system of Governance within itself: Democracy (Hong Kong) + Communist control (Mainland). Thus it can, and does, leverage best of both worlds to doing business efficiently. This also means that Hong Kong, for a city, is in a very strong position to grow up into a cutting edge city of future given the volumes it has to handle for mainland China.
InclinedPlane 13y ago
No, it doesn't all cancel out. China today is basically China, Inc. The people in charge of every aspect of the government are heavily motivated to manipulate this sort of data, just the same way as they try to cover up the pollution in their major cities. In contrast the economies and political systems in the US, Europe, etc. are far more open and not as easily vulnerable to this type of manipulation.
- yapcguy 13y ago
  Why do (some) people still assume that anything coming out of China and Russia must be bad and viewed with suspicion? How about LIBOR rigging? Or traffic lane closures to spite political opponents? If anything you could argue manipulation in the US and Europe is far more sophisticated than China. For example, there's manipulation in plain sight: focus on the U-3 unemployment number rather than the U-6, never mention the labor participation rate where 92 million people in the US have given up looking for work. And look at the news in the UK newspapers today: The corruption of Britain: UK’s key institutions infiltrated by criminals Secret report shows how organised crime infiltrated judicial system as well as police with prison service and HM Revenue & Customs also compromised. http://www.independent.co.uk/news/uk/home-news/the-corruption-of-britain-uks-key-institutions-infiltrated-by-criminals-9052617.html http://www.independent.co.uk/news/uk/home-news/the-corruptio...
  - InclinedPlane 13y ago
    Tu quoque? Yeah, there's corruption in the US/Europe/Japan et al, but that level of corruption is dwarfed by the deeply systemic corruption up to the highest levels in China and Russia, among other places. The fact is you can't even tell what China's GDP is within a factor of maybe +/- 50% due to that corruption.
  - deleted 13y ago
    [deleted]

w1ntermute 13y ago

According to this article[0], most of their economic numbers are severely distorted by manipulation. 0: http://www.theage.com.au/business/china/is-george-soros-betting-against-china-20140110-30l8c.html http://www.theage.com.au/business/china/is-george-soros-bett...

jrs99 13y ago

is this like saying China is being unfair by hacking into our stuff?

ChuckMcM 13y ago

The interesting thing about world trade though is that even if China mis-reports other countries do not. You can sum the Chinese imports reported by countries you trust and get some guesses around how much distortion is in the Chinese "official" numbers. But doing so misses the point. Unlike internal metrics, which have been abused for centuries to give outsiders an impression of greater strength, trade metrics are much harder to "fake." You can, if you choose to, create fake businesses in countries around the world and have them report importing non-existent goods (and pay taxes and duties on those goods!) to give the appearance of a larger trade than you have, but at these magnitudes 3 - 4 trillion it just isn't feasible to fake any more. So the real story isn't whether or not China is the worlds "largest" trader of goods, but that it is even arguable compared to the US economy is something of an "oh crap" moment in terms of global geo-politics. Economies are power. If you have the largest economy you are the most powerful nation because if push came to shove, you can out produce a lesser economic power and win a war of attrition. Going to be a very interesting century.

alexeisadeski3 13y ago
>Economies are power. If you have the largest economy you are the most powerful nation because if push came to shove, you can out produce a lesser economic power and win a war of attrition. If that were true, China would be on similar footing to the US, militarily. But it's not. Not even close. I'll grant that given equal military spending, China would catch up to the US eventually, but it would probably take a decade or three. That's a decade or three of equivalent military spending. And right now China isn't spending anywhere near the US rate.
- asdkl234890 13y ago
  >but it would probably take a decade or three. That is seems like very long. Why would it take three decades?
  - alexeisadeski3 13y ago
    It takes a long time to design and build modern aircraft carriers, then you've got to develop the doctrine and good habits to put all of it to use. The modern world isn't WWII, when you could just throw some aircraft up there and let them shoot it out. Modern aircraft combat amplifies even small differences in ability; a squadron of F-22's might shoot down a squadron of F-15's before the F-15's diagnostics and support could even spot them. I've read anonymous anecdotes of US vs UK wargames in which the last gen US fighters (pre-F22) would wipe out all of the UK aircraft before being detected. Anonymous anecdote, but still. The US also has decades of anti-guided and anti-ballistic missile research and experience. Sure the pure technology can be copied quick, but deploying it to your sea fleet and again developing the proper doctrine and support systems for actually using the stuff takes time. I'm not familiar with the Chinese submarine situation, but the US takes that area very seriously as well. And the problem is that you've got to be strong on all three fronts. Losing largely on any one - surface ship, air combat, submarine - means that your entire fleet may be sent to the bottom of the sea in mere hours... or minutes. Note that the Chinese military leaders understand this, and are focusing their efforts on asymmetric defensive warfare - at least as pertains the US. 'Carrier killer' missiles, sufficient numbers of cruise missiles to overwhelm US naval defenses, submarines. These are relatively cheap and enough to keep the US off China's back (indeed the US is rumored to be keeping all carriers far far away from Chinese coastlines due to the carrier killer) - but it's not enough to achieve anything like parity. Of course I'm just an armchair guy on the internet. I don't have any inside knowledge, just what I've gathered in my reading.