BEIJING, Jan. 23 (Xinhua) -- A new method for calculating global trade flows may not change an overall trade imbalance between the world's two largest economies, but it will likely help reshape the trade relationship between them.
In a joint study, the Organization for Economic Cooperation and Development (OECD) and the World Trade Organization (WTO) break with conventional measurements of trade, which record gross flows of goods and services each time they cross borders. It seeks instead to analyze the value added by a country in the production of any good or service that is then exported.
The OECD-WTO initiative, as WTO director general Pascal Lamy has put it, is designed to "ensure that trade statistics do not lie," or "lie as little as possible."
One headline finding suggests that the much-discussed U.S. trade deficit with China would be much smaller than people thought when measured on a value-added basis.
The novel trade-flow calculation method is mostly a technical issue, but has real-world consequences as trade figures always guide policy formulation.
Traditional measures of trade flows fail to reflect the complexities of global commerce, and the result is a distorted picture, one that leads to ill-informed policy decisions if viewed in isolation.
Beijing style: Duck, opera, fog and cough...
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