US President Donald Trump started the trade war with China, blaming the country for America's 357 billion US dollar trade deficit. But the statistics only tell the value flow of final products, not that of intermediate goods. Let's have a look.

A part of China's trade surplus with the U.S. is the re-exportation of intermediate goods. The latest data in 2016 shows that China imported 357 billion US dollars worth of intermediate goods, about 22 percent of China's total imports. Part of those intermediate goods were re-exported to the U.S. and other countries. Their value was usually included as being in the final products from China.

XU XIANCHUN TSINGHUA UNIVERSITY "A global industrial chain arose from globalization. One country could take part in a single procedure of production. As final products are usually assembled in China, the value of intermediate goods becomes China's trade surplus statistically."

Empirical data shows that most developed economies recorded trade surpluses from intermediate goods during their economic expansion. During the 97 years from 1874 to 1970, the U.S. recorded trade surplus in 93 of those years. Germany recorded surpluses in 84 years since 1880 when records began to 2016. Japan had kept 30 consecutive years of trade surplus from 1981 to 2010. In the 1970s, manufacturers moved from the U.S. to the Japan and the four Asian Tigers. Since the beginning of the new century, factories begun to immigrate in China for cheap labour. In 2017, about 37 percent of China's exports to the U.S. comes from trade of processing such as the assembly of cellphone and computers.

LIANG MING, DIRECTOR INSTITUTE OF INTERNATIONAL TRADE CHINESE ACADEMY OF INTERNATIONAL TRADE AND ECONOMIC COOPERATION "Cellphones contributed the most to China's trade surplus with the U.S.. That's about 43.7 billion US dollars. And most are orders from Apple. The second comes from computers ordered by Dell and other companies. The U.S. government didn't include these products in the tariff list as they know it will hurt themselves."

As a global manufacturing center, China imports intermediate goods and exports final products. But the value of intermediate goods is statistically calculated as from China but not actually produced in China.