The Sino-US trade frictions this year have mainly focused on China's trade surplus with the United States, but international trade includes not only trade in goods but also trade in services. Over the years, China has accumulated a large trade surplus with the United States which mainly in the field of goods trade. In the field of service trade, China's service trade deficit has been expanding year by year, and the United States is the largest source of China's service trade deficit.
In recent years, the proportion of China's trade in services in foreign trade (the sum of imports and exports of goods and services) has continued to rise ,which has increased from 10.3% in 2011 to 14.5% in 2017. In stark contrast to the growing goods trade surplus in China, the service trade deficit in China is increasing at a faster rate. In terms of absolute volume, China's service trade deficit from 2014 to 2017 exceeded 130 billion dollars every year, especially in 2016 and 2017, China's service trade deficit exceeded 260 billion dollars. According to the monthly data released by the State Administration of Foreign Exchange, in the first half of this year, China's trade in services went up to 148 billion dollars. If the trend of service trade remains unchanged in the second half of the year, China's service trade deficit will hit a record of nearly 300 billion dollars in 2018.
From the perspective of the service trade deficit structure, the deficit in tourism services is precisely the largest contribution to China's service trade deficit. In 2017, the deficit in tourism service trade amounted to US$220 billion 900 million, accounting for 84.6% of the total deficit in the trade deficit of $261 billion 200 million. In addition, emerging service trade represented by fees for the use of intellectual property is becoming an important source of China's service trade deficit. In 2017, the import and export of the use of intellectual property rights in China increased by 34.7%. The import of intellectual property rights was 6 times as close to that of the export. The scale of the deficit was expanded to 160 billion 850 million Yuan, an increase of 6% over the previous year. The deficit in the use of intellectual property rights has maintained a certain scale in recent years. According to the statistics of the Ministry of Commerce of the People's Republic of China, China's intellectual property royalty deficit exceeds 20 billion U.S. dollars per year from 2014 to 2019. There is a huge deficit in China's intellectual property rights, indicating that the pace of technological upgrading of Chinese enterprises is accelerating and the intellectual property market is booming, creating huge market opportunities for high-tech enterprises in various countries.
From the perspective of the source of service trade deficit, the United States is the largest source of China's service trade deficit. China's contribution to the US service trade surplus has been increasing year by year. In 2017, the US service trade surplus with China accounted for 15.9% of the total service trade surplus in the United States, which was 12% higher than that of 10 years ago (4% in 2008). In terms of the amount, the US trade surplus with China in 2017 was 38.5 billion US dollars, nearly 8 times that of 2008. These data are based on statistical calculations in the United States. Bureau of Economic Analysis of U.S. also shows that Chinese residents' expense on tourism Service Trade in the United States (including education, etc.) has maintained double-digit growth for many years. In 2017, this number is up to 32 billion 180 million dollars. Besides, the United States is also the largest source of China's import of Technology at present, nearly one-third of China's technology import contracts are purchased from the United States. In 2017, according to US statistics, China's purchase of intellectual property from the United States reached US$8.53 billion, which was up 120% year-over-year. Excepting the individual year, China also maintained the double-digit growth of technology import from the United States.
Judging from the Sino-US intellectual property trade data, American companies have made big money from China in intellectual property trade. As ANBOUND Consulting researchers pointed out earlier, China does require the transfer of intellectual property rights on some large systems. However, such large systems are often big transactions made by Chinese state-owned enterprises. Western companies compete under free market rules. One is willing to buy, one is willing to sell, and has made big money in these big deals. Until now, no Western company has been able to stand up to say the Chinese are robbers because I have gained nothing in intellectual property trade with China. Most of them gained a lot of interests in many years of china's development . Many Western companies' profits have been supported by the Chinese market for a long period of time. Until now, China's service trade has been in a stable deficit, which has clearly proved this point.
Researchers at ANBOUND Consulting believe that analyzing China's trade friction should start with the overall trade structure. The trade imbalance between China and the United States is a structural imbalance. China has a surplus with the United States in the trade of goods, on the contrary, China has a deficit with the United States in service trade. This also fully reflects the different comparative advantages of the two countries. China has a comparative advantage in the trade of goods, while the United States has a comparative advantage in service trade. In order to eliminate the trade imbalance between China and the United States, we must not only see the trade in goods but also pay attention to trade in services. From the perspective of economic development, the Sino-US trade surplus will gradually shrink, but the Sino-US service trade deficit will gradually expand. The result is that trade between the two countries will reach a new equilibrium point.
Final Analysis Conclusion:
The trade imbalance between China and the United States is a structural imbalance.When we see the trade surplus of goods, we must also see the trend of expanding of the service trade deficit, which will help the trade between two countries achieve a new balance.
