The WSJ ran this headline and story a few years back:
China reports biggest-ever annual trade surplus with the US: WSJ reports that China reported its largest-ever yearly trade surplus with the US last year while its overall imbalance with the world shrank, potentially strengthening the Trump administration's case for tougher penalties and other trade actions against Beijing.
The metric is helpful for lazy politicians but is useless otherwise.
A trade surplus is a useless metric to gauge the accurate state of a nation's economy, but it is a helpful tool for pandering campaign rhetoric.
You need to remember that, at its core, China is an assembly economy.
Thus, China's economy is a prime example of the obvious statement that the whole is greater than the sum of its parts.
Most Chinese companies import components and materials worldwide and assemble them into valuable products for sale globally.
No R&D. No branding. No marketing. No finance. No software. No logistics.
Consider the iPhone. China assembles components into a finished smartphone and ships an iPhone to customers in the United States.
However, Apple in California does all the heavy lifting to make the iPhone the iPhone. Apple handles the R&D, the branding, the marketing, the financing, the software, and the logistics.
Current trade surplus formulations do not measure all the activities executed by Apple listed above.
There is more to a nation's trade and economy than whether or not a nation has a trade surplus or deficit.
There is more to the state of a nation's economy than unloading boxes of assembled products at a port.
-Marc
This headline is useless for understanding a nation's economy
