No. 2006-07-A

OFFICE OF ECONOMICS WORKING PAPER

U.S. INTERNATIONAL TRADE COMMISSION

Alexander B. Hammer 

U.S. International Trade Commission 

July 2006 

The author is with the Office of Economics of the U.S. International Trade 

Commission. Office of Economics working papers are the result of the ongoing 

professional research of USITC Staff and are solely meant to represent the 

opinions and professional research of individual authors. These papers are not 

meant to represent in any way the views of the U.S. International Trade 

Commission or any of its individual Commissioners. Working papers are 

circulated to promote the active exchange of ideas between USITC Staff and 

recognized experts outside the USITC, and to promote professional 

development of Office staff by encouraging outside professional critique of 

staff research. 

Address correspondence to: 

Office of Economics 

U.S. International Trade Commission 

Washington, DC 20436 USA 

The Dynamic Structure of U.S.-China Trade, 1995-2004
FOR USITC WORKING PAPER SERIES: 

The Dynamic Structure of 

U.S.-China Trade, 1995-20041

⎯ PRELIMINARY FINDINGS ⎯

Alexander B. Hammer 

EXECUTIVE SUMMARY & CONCLUSION 

I. An Overview of China-U.S. Trade 

II. The Single-Dimensional Decomposition of Total U.S. – China Trade 

 - Ownership structure 

 - Customs regime 

 - Incentive scheme 

 - Product type 

III. The Multi-Dimensional Decomposition of Product Drivers in U.S. – China Trade 

 

 - Comparing the Structure of China’s Top Export & Import Product Drivers to/from the U.S., 

 to the Structures of: 

 (1) China’s Overall Exports & Imports to/from the U.S.; and 

 (2) Other Top Export & Import Product Drivers to/from the U.S. 

IV. The Largest Multi-Dimensional Export & Import Contributors to U.S.-China Trade 

V. Recommendations for Further Research 

APPENDICES I-VI 

 

1

 The views expressed in this paper do not necessarily represent those of the U.S. International Trade Commission or 

any of its Commissioners. 
CONCEPT: ACRONYM: DEFINITION:

GLOSSARY OF FREQUENTLY USED TERMS:

Bonded Areas/Zones BA / BZ

Special geographic areas near Chinese ports where foreign and domestic 

enterprises are authorized to store, service, and process traded goods free 

of import duties.

Collectively-Owned 

Enterprises COEs Quasi-public, quasi-private Chinese firms whose assets are equally owned by a community of people working together.

Economic and Technological 

Development Areas/Zones ETDAs / ETDZs

Special geographic areas located inside China's open coastal cities, where 

foreign and domestic enteprises are provided preferable tax, customs duty, 

and land rent incentives.

Export Processing 

Areas/Zones EPAs / EPZs

Special geographic areas located inside China's SEZs. Although smaller 

and typically more export-oriented than SEZs, their provided incentives to 

foreign and domestic business are comperable.

Foreign-Invested Enterprises FIEs Companies operating in China whose assets are owned, in full or in part, 

by foreign firms.

High-Technology Industrial 

Development Areas/Zones HTIDAs / HTIDZs

Special geographic areas established by China's national government to 

lure high-technology foreign companies through reduced corporate taxes 

and import duties.

Ordinary Trade n.a. Refers primarily to imports intended for China’s domestic market, and 

exports that are mostly based on local Chinese input.

Private Enterprises PEs Profit-making firms invested and established by individuals.

Processing and Assembly n.a. A type of processing trade, mostly conducted by SOEs and FIEs

Processing Trade n.a. Refers mainly to imports of goods that are intended to be assembled or 

transformed in China, and subsequently re-exported.

Processing with Imported 

Parts n.a. A type of processing trade, mostly conducted by FIEs. 

Special Economic Zones SEZs

Special geographic areas in China that provide foreign and domestic 

businesses with reduced corporate taxes and import duties, as well as 

greater managerial autonomy.

State-Owned Enterprises SOEs A Chinese firm whose assets are officially “owned by the people and 

managed by the state”.

― Page 2 of 34 ―
EXECUTIVE SUMMARY AND CONCLUSION 

The aim of this paper is to identify structural developments in China’s external sector that 

have significantly influenced that country’s large and growing merchandise trade surplus 

vis-a-vis the United States. To reach its objective, this paper will decompose U.S.-China 

trade flows according to a series of independent and interdependent criteria, using highly 

disaggregated 1995-2004 customs data that the U.S. International Trade Commission 

(USITC) recently acquired from official sources in China. 

This paper will serve as the first of many USITC research products on the dynamics of 

China’s trade experience over the past decade. An extensive research agenda has already 

been scheduled to follow the publication of this paper, which will include collaborative 

research with Dr. Judith Dean, Dr. Michael Ferrantino, Ms. Joanne Guth, Dr. Zhi Wang, 

and myself (all from the USITC), as well as our organization’s academic collaborators Dr. 

K.C. Fung (UC Santa Cruz), Dr. Lawrence Lau (Stanford University and the Chinese 

University of Hong Kong), and Dr. Shunli Yao (Peking University). For this paper, the 

comments of Dr. Judith Dean were particularly useful in adding structure to the study’s 

scope, clarity to its method of presentation, and precision to its underlying analysis. 

After providing an overview of China’s merchandise trade balance with the United States 

in Part I of this analysis, Part II will identify structural developments in bilateral trade 

flows using independent classifications of the customs data. Specifically, it will expose 

patterns that have emerged by decomposing merchandise trade flows one factor at a time, 

starting with the ownership structure of the considered firms, then their “customs regime”, 

“incentive scheme”, and finally, the type of goods being traded. Part III will then build 

upon those findings by decomposing the structures of the fastest growing product 

categories in bilateral trade, according to the firm-specific criteria identified above. By 

constructing a multi-dimensional profile of these product drivers and comparing those 

results to the profile of China’s overall trade with the United States (as well as to other 

identified product trade drivers), we will gain deeper insight into the important factors 

that have influenced trade flows between the two countries. Part IV will then identify the 

single-greatest multi-dimensional contributor to China’s latest export and imports to/from 

the United States. Finally, the last part of this analysis will provide recommendations for 

subsequent research. 

Key findings in this investigation can be broadly categorized into general, export-specific, 

and import-specific observations: 

 General: 

 FIEs: Foreign-invested enterprises have constituted China’s largest (since 2002) 

and fastest growing source of (1) exports to the United States as well as (2) 

imports from the United States;

• Private firms: China’s private firms have been another primary source of growth 

behind bilateral merchandise trade flows, especially since 2000;

• Electronics on the global supply chain: Electronic machinery (HS-84) constituted 

the largest and fastest growing product category source of export and imports 

― Page 3 of 34 ―
to/from the United States, supporting anecdotal evidence of China’s growing 

integration on the global electronics supply chain;

• Incentive schemes: Enterprises operating in China’s special incentive zones, 

particularly its Economic and Technological development zones (ETDZs), have 

positively influenced bilateral trade vis-à-vis the United States. ETDZs and other 

special incentive zones have played a more dominant role in China’s imports from 

the United States, relative to China’s exports to the United States. 

Export-specific: 

• Dominant product drivers: China’s exports of computers, office machinery, 

associated computer and office machinery parts, radio/telephone/handset 

transmitters, and other HS-84 & HS-85 products represented the largest and 

fastest growing source of exports to the United States in the considered period.

• Role of FIEs in top export categories: FIEs represented a disproportionately large 

share of China’s exports to the United States among top product driver categories;

• Role of processing with imported materials in top export categories: Enterprises 

in China’s machinery (HS-84 & HS-85) exports to the United States 

disproportionately specialized in “processing with imported materials”;

• Largest multi-dimensional contributor to exports: Laptop computers that were 

produced by FIEs in Export Processing Zones (EPZs), and which used imported 

materials as primary inputs, constituted the largest multi-dimensional contribution 

to China’s 2004 exports to the United States.

Import-specific: 

• Dominant product drivers: While electronic machinery represented China’s 

largest source of product imports from the United States in 2004, overall imports 

of yellow soybeans, integrated electrical circuits, and other products from the HS12 & HS-85 categories, represented the largest source of import growth from the 

United States in the considered period. 

• Special role of FIEs in top import categories: FIE electrical machinery imports 

represented China’ largest dual (product-ownership) combination of imports from 

the United States in 2004. Relative to China’s total imports from the United States, 

the share FIE electronic machinery imports grew from 5% in 1995 to 13% in 2004. 

• Largest Contributor to Imports. Yellow soybeans from FIEs’ engaged in ordinary 

trade in non-incentive-based systems contributed more than any other ‘multidimensional’ component to China’s 2004 total imports from the United States. 

• Largest Contributor to Electrical Machinery (HS-84) Imports: China’s individual 

function machinery and mechanical appliance start-up equipment from FIEs 

operating in ETDAs, contributed more than any other ‘multi-dimensional’ 

component to China’s top electrical machinery imports from the United States. 

• Concentration of imports: Although China’s single greatest import product from 

the United States was yellow soybeans, the more diversified set of machinery 

imports from the United States collectively accounted for a greater share of 

China’s overall 2004 imports from the United States. 

― Page 4 of 34 ―
PART I-INTRODUCTION 

AN OVERVIEW OF CHINA-U.S. TRADE 

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CHINA'S MERCHANDISE TRADE BALANCE

(In $US Bil)

China'sTrade Balance w/World

China's Trade Balance w/US

China’s merchandise trade surplus 

with the United States is 

distinguished by both its magnitude 

and dynamism. In 2004, its surplus 

amounted to $80.3 billion, which 

was two and a half times greater than 

China’s overall trade surplus of 

$31.9 billon (see adjacent figure). 

Over the past decade, the difference 

between the two balances widened 

due to the rapid pace of growth in 

China’s bilateral trade surplus with 

its largest trading partner, the United 

States. 

Two phenomena help explain why the gap between China’s overall and bilateral U.S. 

trade balance has widened over the past decade. First, China’s merchandise export 

growth to the United States has outpaced China’s overall merchandise export growth. 

Consequently, the share of China’s exports headed toward to the United States has grown 

(from 17% in 1995 to 21% in 2004). Second, China’s imports from the United States 

have grown at a considerably slower pace than China’s overall imports. This has resulted 

in a loss in the share of China’s imports originating from the United States (from 12% in 

1995 to 8% in 2004). Appendix I-A and I-B provide greater detail about the size and 

growth of the United States’ share of the Chinese export and import markets relative to 

China’s other major trading partners. 

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CHINA'S MERCHANDISE EXPORTS AND IMPORTS

(In $US Bil)

China's Exports to World China's Imports from World

China's Exports to U.S. China's Imports from U.S.

The adjacent figure illustrates the 

magnitude of China’s merchandise 

trade flows vis-à-vis the world and the 

United States, and provides 

perspective over the size and growth 

of the trade flows that will be 

decomposed in the subsequent section. 

As can be seen, China’s exports to the 

United States grew from $24.7 in 1995 

to $124.9 billion in 2004 (exhibiting a 

20% average annual growth rate), 

while China’s imports from the United 

States grew from $16.1 to $44.7 

billion (exhibiting a 13% average annual growth rate) over the considered time horizon. 

― Page 5 of 34 ―
PART II: THE SINGLE-DIMENSIONAL DECOMPOSITION OF 

TOTAL U.S.-CHINA TRADE 

This part of the investigation will show how the structure of China’s trade with the 

United States has changed over time, by decomposing bilateral trade flows using 

independent criteria. Specifically, China’s bilateral trade with the United States was 

disaggregated according to ownership structure, customs regime, incentive scheme, and 

the Harmonized System’s (HS) 2-digit product classification. The table below provides 

an overview on how the data was disaggregated. 

Section Classification: Breakdown (see definitions below):

1 Firmtype (1) SOEs; (2) FIEs (including Sino-Foreign Contractual and Equity Joint Ventures); (3) COEs; and (4) Private 

Enterprises

2 Customs 

Regime

(1) Ordinary trade; (2) Process & assembly; (3) Process w/imported materials; (4) Warehousing trade; (5) Entrpot trade 

by bonding activity; (6) Compensatory trade; and (7) Equipment/machinery investment by FIEs.

3 Incentive 

Scheme

(1) SEZs; (2) Economic & Technology Development Areas; (3) High-Technology Industry Development Area; and (4) 

Bonded Area.

4 Product HS-2 Classification

Part II: Decomposing China-U.S. Trade

Part II, Section 1: Decomposing China-US Trade by Ownership Structure:

Classifying China’s exports and imports to/from the United States by firm-type reveals 

major structural changes that have unfolded over the past decade. The most important of 

these changes revolved around FIEs and private enterprises, which have shouldered a 

large and progressively growing share of China’s overall trade with the United States. 

 

Background: Since the initiation of China’s economic reforms in 1978/79, Chinese policy 

makers have implemented a series of measures that have gradually, and profoundly, 

restructured the country’s system of enterprise ownership. Prior to the reform period, 

state-owned enterprises (SOEs), or non-corporation economic units whose assets were 

officially “owned by the people and managed by the state”, formed the basis of economic 

activity in China, as they implemented the national government’s planning objectives. 

Faced with unmet domestic demand problems and enterprise inefficiencies, yet 

constrained by social pressures 2 , reformers set out a dual-track strategy aimed at 

increasing SOE efficiency while allowing non-state sector firms to burgeon. Although 

SOE production increased over the course of the next two and a half decades, the more 

rapid growth from other forms of enterprises essentially relegated SOEs to shoulder a 

progressively smaller share of economic output. By 2003, the state sector only accounted 

for 13% of domestic economic activity3 in China, and by 2005, employed only 9% of 

China’s workforce4. Although China’s “growing out of the plan” 5 strategy has been very 

successful thus far, it has not ended, as SOEs still employ over 65 million people in 

China as of 2005. 6

 

2

 The majority of China’s workforce at the time was employed by SOEs, many of which provided strong housing, 

healthcare, and education benefits. 

3

 See China Statistical Yearbooks using CEIC [1] 4 Ibid

5

 See Naughton [8] 

6

 See China Statistical Yearbooks using CEIC [1] 

― Page 6 of 34 ―
As China’s government relaxed its monopolistic control over SOEs and legalized the 

status of other forms of enterprises in the early period of its reform process, market entry 

opportunities arose. Specifically, a large number of start-ups were created, initially from 

quasi-public, quasi-private collectively-owned enterprises (COEs) whose assets were 

equally owned by a community of people who worked together. COEs burgeoned in 

rural areas (first in the agricultural, then industrial sectors), in large part due to the 

government’s “household responsibility system” that made farmers landholders and 

decision-makers. COEs currently consist, as they did two decades ago, of a large array of 

enterprise types, including township-village enterprises (TVEs), SOE subsidiaries, and 

enterprises owned by both the central and provincial governments. They are typically 

much smaller than SOEs, and, in aggregate, currently employ more employees than any 

other type of enterprise (142.7 million, or 19% of China’s workforce in 20057

). 

Owing to the fact that private companies were nationalized in the 1950s, the existence of 

private enterprises in China’s pre-1978 economy was rare. This changed during the 

reform period, as the government legalized the status of these “profit-making economic 

units invested and established by people”. Since then, private enterprises have been 

proliferating in China, and their influence over the entire economy has grown. Currently, 

many forms of enterprises are categorized as private, including private limited liability 

corporations, private share-holding corporations ltd, private partnership enterprises as 

well as private-funded enterprises. While these forms of enterprises typically employ 

fewer than 8 employees, by 2005 they accounted for roughly 7 percent of China’s 

workforce8. 

China’s historic opening to the global economy that began in the early part of its reform 

period has evolved dramatically over the course of the last two and a half decades, and 

now includes the country’s membership in the World Trade Organization (WTO). 

China’s integration into the world economy predominantly transpired via foreigninvested enterprises (FIEs), or companies operating in China whose assets were owned, 

in full or in part, by foreign firms. At the beginning of the reform period, FIEs were 

principally located in coastal zones outside of China’s industrial centers, so as to 

minimize interactions with firms heavily influenced by state-direction. As time 

progressed, interactions with FIEs and TVEs increased9

, which ultimately transformed 

the economic environment of the coastal regions10. Soon thereafter, the United States, 

Japan and EU dramatically increased their FDI to China via FIEs, both to gain access to 

cheaper domestic manufacturing costs, and, later, to sell their products domestically to a 

progressively wealthier Chinese consumer base. Currently, FIEs consist of wholly-owned 

FIEs (WOFEs), and joint-ventures such as Sino-Foreign Contractual Joint Ventures and 

Sino-Foreign Equity Joint Venture. Only 4% of China’s labor force was employed by FIE 

by 2005. 

 

7 Ibid

8 Ibid

9

 See Rodlauer, p.90 [10] 

10 Ibid

― Page 7 of 34 ―
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CHINA'S EXPORTS TO U.S. BY ENTERPRISE TYPE

(In percent) SOE FIE

COE Private

1995 2004 Composition Change 

(1995-2004)

Share of Exports 100.0 100.0

For

Col

SO

eign Invested 45.2 65.8 20.6

Private 0.0 8.3 8.3

lective 1.3 4.3 3.0

Es 53.4 21.5 -31.9

Table 1: Compostion of China Exports to U.S. by Firm-Type

(In percent of total export value)

China’s Exports to the United States ►By Firm-Type◄ Despite the fact that Chinese 

SOEs have recorded positive growth in their exports to the United States in the 

considered period, the faster pace of growth from other forms of enterprises has meant 

that SOEs have shouldered a 

progressively smaller share of China’s 

overall U.S.-bound exports. The void 

has been predominantly filled by FIEs, 

which have been the engine of growth 

behind overall Chinese exports to the 

United States, and which now account 

for nearly two thirds of China’s total 

exports to the United States (compared 

to less than half in 1995, and 

considerably less in preceding years). 

Private firms have also been an 

important driver of growth since 2001, 

and currently 

shoulder 8.3% of 

the value of overall 

Chinese exports to 

the United States, 

compared to 

virtually nothing in 

2000. Table 1 

displays these 

drivers of growth in order of the magnitude of their market share increases throughout the 

considered period. 

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CHINA'S EXPORTS TO U.S. BY ENTERPRISE TYPE

(In percent) SOE FIE

COE Private

China’s Imports from the United States ►By Firm-Type◄: The different growth 

patterns from various forms of importing 

Chinese enterprises have also created a 

notable structural shift in the 

composition of overall imports from the 

United States. Despite the fact that SOE 

imports from the United States have 

grown steadily over time, the faster pace 

of growth from China’s overall U.S. 

imports has meant that SOEs have 

shouldered a progressively smaller share 

of China’s overall imports from the 

United States. As with the case in 

exports, the void has been 

predominantly filled by FIEs., which have also been the engine of growth behind overall 

Chinese imports from the U.S.. FIEs now account for over half the value of China’s total 

imports from the U.S. (compared to a third in 1995, and considerably less in preceding 

years). Private firms have also been an important driver of growth since 2001, and 

― Page 8 of 34 ―
1995 2004 Composition Change 

(1995-2004)

e of Imports 100.0 100.0

Foreign Invested 33.2 52.2 24.7

Private 0.1 8.4 8.3

Collective 0.7 5.4 4.8

Table 2: Compostion of China Imports to U.S. by Firm-Type

(In percent of total import value)

Shar

SOEs 66.1 33.9 -32.1

currently shoulder 8.3% of the value of overall Chinese imports from the U.S., compared 

to virtually 

nothing in 2000. 

Table 2 sorts 

these drivers of 

import growth by 

the magnitude of 

their market share 

increases 

throughout the considered period. 

Comparing China’s Exports and Imports to/from the United States ►By Firm-Type◄:

The gains foreign invested and private enterprises have made in their respective shares of 

China’s exports and imports markets with the United States over the past decade have, 

interestingly, complement one another. Specifically, the 20% market share increase of 

FIEs in exports to the United States have been matched by a 25% increase in FIE’s 

market share of overall imports from the United States. This trend also exists with private 

enterprises, whose share of China’s overall exports and imports grew by 8 percent in both 

directions. The developments are likely reflective of these firms’ growing importance in 

integrating China in the global manufacturing supply chain 

To understand key differences between the ownership structure of China’s export and 

import market to/from the United States, we turn to figures A and B of Appendix II. By 

juxtaposing these graphs, we can see that: (1) China’s SOEs have played a stronger role 

in importing goods from the United States compared to exporting goods; (2) Chinese 

FIEs have had a stronger role influencing overall U.S. bound exports than imports; (3) 

China’s private enterprises have shouldered nearly the same share of the overall value of 

exporting and importing goods going to and arriving from the United States. 

Part II, Section 2. Decomposing China-US Trade by Incentive Scheme:

By repeating the methodology employed in the previous sections, we can decompose 

China’s exports to the United States by incentive scheme, and use the figures in 

Appendix II (C & D) to guide our understanding of long-term structural changes. This 

section will identify the fact that, when classifying China’s trade flows to/from the United 

States by incentive scheme, “Economic & Technological Development Areas” (ETDAs) 

have replaced “Special Economic Zones” (SEZs) as important sources of Chinese trade 

with the United States. 

Background: A central component of China’s 1978-initiatted economic reform strategy 

entailed the gradual opening of its economy to international trade and investment. To 

implement its objective, China established four special economic zones (SEZs) along the 

eastern coast of China in 1980. Business operations in SEZs were distinguished by their 

decentralized decision making-authority (could be made outside the plan), temporary 

― Page 9 of 34 ―
exemption from corporate income tax and import tariffs, and, most importantly, their 

capacity to draw foreign investment from FIEs through tax concessions and fewer foreign 

exchange and land use restrictions. Later, several export processing areas (EPAs) were 

established as enclaves within SEZs, and shared many of their advantages. Key 

differences only lied in their smaller physical size, their degree of export orientation 

(EPZs are almost exclusively export-oriented), and internal emphasis on managerial and 

skill training. 11

Based on the success of the original four SEZs, Chinese authorities granted similar 

privileges to an additional 14 port cities in 1984, initially referred to as “open coastal 

cities”. While modeled after SEZs, these areas were not exempt from corporate tax relief. 

Nevertheless, they were created in pre-established industrial bases, and consequently had 

immediate access to surrounding human and physical capital. Soon, these open coastal 

cities established their own “economic and technological development areas” (ETDAs) 

in certain districts, to further facilitate trade with foreign firms. In exchange for direct 

investment and technology, these ETDAs offered foreign firms the opportunity to trade in 

China with certain tax, customs duty, and land rent incentives. Meanwhile, China’s 

national government established a few high-technology industrial development areas

(HTIDAs) with similar incentives, which aimed to promote trade with higher technically 

foreign firms. 

Within the next few years, preferential “open city” policies were extended throughout 

China’s southeastern, and subsequently, northeastern coasts. The largest of these was the 

Pudong New Zone, which was created in 1990 in the eastern part of Shanghai (China’s 

largest city), and which offered businesses incentives that even surpassed those from 

traditional SEZs 12 . By 2002, 34 new state-sponsored ETDZs were established in the 

capital cities of several provinces, while 53 state-level HTIZs were either created or 

merged with former ETDZs. Also in that year, the national government established other 

forms of zones, such as Bonded Areas (BE) and Border Economic Cooperative Zones 

(BECZ), to further stimulate investment. Of these, bonded areas have been most 

prominent, given their authorization to store, service, and process traded goods coming in 

and out of China’s ports, free of import duties. 

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CHINA'S EXPORTS TO U.S. BY INCENTIVE SCHEME China’s Exports to the United States (In percent)

SEZs

HTIDZs ETDZs

No Scheme Bonded Areas

►By Incentive Scheme◄ As can be 

seen in the adjacent figure, the share of 

China’s U.S.–bound exports that 

originate from special incentive systems 

is non-negligible and growing. 

Collectively, they accounted for a 

quarter of China’s total exports to the 

United States in 2004, compared to 17% 

in 1995. Table 3 highlights the fact that 

 

11 See Von Claus Knoth [12] 

12 These include incentives for foreign firms to invest in domestic Chinese businesses previously unauthorized to be the 

recipients of foreign investment, including department stores, supermarkets, and banking and insurance firms. 

― Page 10 of 34 ―
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CHINA'S IMPORTS FROM U.S. BY INCENTIVE SCHEME

(In percent)

SEZs

HTIDZs ETDZs

No Scheme Bonded Areas

Share of Exports: 1995 2004 Composition Change (1995

2004)

Table 3: Compostion of China Exports to U.S. by Incentive Scheme

(In percent of total export value)

-

Incentive-Scheme Based

High-Technology Industry Development Zones 0.6 6.5 5.9

Economic & Technological Development Zones 5.0 10.4 5.4

Bonded Areas 0.3 3.2 2.8

Special Economic Zone (SEZs) 11.3 5.7 -5.6

Subtotal 17.2 25.7 8.5

Non-Incentive Scheme Based, Subtotal 82.8 74.3 -8.5

exports from Chinese ETDZs and HTIDZs account for 10% and 7% of overall 2004 

exports to the United States respectively, compared to only 5% and 1% in 1995. The 

simultaneous decline in the share of exports to the United States from SEZs is attributable, 

in part, to the fact that 

SEZs growth is 

constrained to a more 

limited number of 

enterprises (around 

14) which are 

unlikely to grow in 

number. 

Share of Imports: 1995 2004 Composition Change (1995-

2004)

Incentive-Scheme Based

Economic & Technological Development Zones 6.8 17.0 10.2

Bonded Areas 1.5 10.1 8.6

High-Technology Industry Development Zones 1.3 3.8 2.5

Special Economic Zone (SEZs) 9.8 7.2 -2.6

Subtotal 19.3 38.1 18.8

Non-Incentive Scheme Based, Subtotal 80.7 61.9 -18.8

Table 4: Compostion of China Imports to U.S. by Incentive Scheme

(In percent of total import value)

China’s Imports from the United States ►By Incentive Scheme◄ As was the case with 

exports, SEZs used to dominate China’s 

import market from the United States. 

The faster pace of growth in the value 

and number of other incentive zones 

(most notably economic & technological 

development and bonded areas) has 

meant that SEZs have lost their 

dominant share of the overall export 

market in the category despite their 

positive import growth from the United 

States. It is also interesting to note that 

total incentive-scheme systems 

accounted for nearly 40 

percent of overall imports 

from the United States in 

2004, compared to about 

half that share in 1995. 

Comparing China’s 

Export and Import Flows to/from the United States ►By Incentive Scheme◄ Appendix 

II (C&D) serves as an effective tool for understanding key differences between the 

“incentive scheme” structure of China’s dynamic export and import market to/from the 

United States. Key observations include the fact that: (1) incentive-based firms have 

played a more dramatic role in importing from the U.S. than exporting, as demonstrated 

by the by the fact that the combined exports of all incentive-based firms reached a peak at 

25% in 2004, compared to around 38% for imports. Second, “economic & technological 

development areas” are currently the dominant form of incentive-based trade with the 

United States, accounting for 10% of total exports and 17% of total imports, respectively. 

Third, SEZs have been the largest losers of market share in both export and import 

markets and no longer play the dominant roles in either trade markets (due to their slower 

growth and limited number of zones). Finally, bonded areas have shouldered a greater 

― Page 11 of 34 ―
share of the value of China’s import market from the United States compared to China’s 

export market to the United States. 

Part II, Section 3. Decomposing China-US Trade by Customs Regime:

Using the methodology employed in the previous section, we can also decompose 

China’s exports to the United States according to “customs regime” (reflecting the type 

of trade being conducted). In so doing, we will highlight the fact that China’s export 

growth to the United States was most heavily influenced by “processing with imported 

materials”, while import growth was most influenced by “entrepot trade from bonded 

areas” and “processing and assembly’. 

Background: China’s trade liberalization strategy followed a two-fold objective of (1) 

decreasing trade barriers for foreign firms attempting to penetrate China’s market and (2) 

providing incentives for export-oriented foreign and domestic enterprises. First, starting 

from the early stages of the reform process, China substantially reduced its trade and nontrade barriers. According to the World Bank, tariff levels fell most precipitously in the 

1990s, from an average from 42.9% in 1992 to 15.5 by 1997, while quotas and licensed 

were also dramatically reduced.13 China’s accession to the WTO put further pressure to 

lower trade barriers in subsequent years. Second, China provided tariff duty exemptions 

on select imports to provide export-oriented firms with added incentives, and to stimulate 

investment and capital through FDI. Here, intermediary products that were imported for 

the production of exports were granted the most favorable tariff exemptions. Other 

concessions included lowered tariffs on equipment imported by foreign firms for their 

start-up investments in China. 

Until the early 1990s, Chinese customs statistics separated trading regimes into two main 

categories: those that involved firms doing processing for outward-bound exports (which 

were not taxed) and those that involved firms conducting trade with the domestic 

economy (where imports were heavily taxed and exports were directed through special 

foreign trade corporations). Although the government began lifting restrictions on the 

later category in 1992, Chinese customs statistics still maintained these basic distinctions. 

Now, the increasingly fragmented regime structure in China’s economy can be 

subdivided into the four basic groups. 

• Ordinary trade refers to imports intended for China’s domestic market, as well as 

exports that are primarily based on local Chinese inputs. 

• Processing trade refers mainly to imports of goods that are intended to be assembled 

or transformed in China, and subsequently re-exported (all within the international 

assembly and subcontracting operations). The imported inputs are generally exempt 

from customs tariffs, while the finished goods are intended to be sold outside of 

China’s market. This category is further subdivided into process and assembly 

(mostly conducted by SOEs and FIEs), and processing with imported inputs (almost 

exclusively conducted by FIEs). 

 

13 See Lemoine, p.12 [ 6] 

― Page 12 of 34 ―
• Imports of goods by FIEs refer to imports from FIEs that are part of their start-up 

investment. Specifically, the initial investment is exempt from customs duties, and 

generally includes equipment and machinery. 

• Other trade refers to non-specified forms of trade, including compensatory trade, 

international aid, warehousing, and entrepot trade (a place where goods are stored or 

deposited and from which they are distributed). These forms of trade are not subject 

to the general tariff regime. 

1995 2004 Composition Change 

(1995-2004)

Share of Exports 100.0 100.0

P

E

rocess w/imported materials 49.4 53.4 4.0

ntrepot trade by bonded area 0.0 1.2 1.2

Ordinary trade 29.8 30.5 0.7

Warehousing trade 0.7 1.3 0.6

Other 0.0 0.0 0.0

Compensatory trade 0.1 0.0 -0.1

Process & assembing 20.0 13.7 -6.4

Table 5: Compostion of China Exports to U.S. by Customs Regime

(In percent of total export value)

China’s Exports to the United States 

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

►By Customs-Regime◄ Although there 

exist many types of “customs regimes”, 

only three have dominated China’s 

export market to the United States. In 

order of their share of total 2004 exports, 

they are “process w/imported materials”, 

“ordinary trade”, and “process and 

assembly” (note the two processing 

categories). In the past ten years, export 

growth to the United States has been 

driven by “process w/imported 

materials” firms, as its share of overall 

exports to the United States 

has increased from 49% to 

53% in the considered 

period. (see Table 5). The 

significance of this 

observation is heightened 

by the fact that processing 

with imported materials 

already consisted of the 

largest share of the overall 

China-US export market. 

CHINA'S EXPORTS TO U.S. BY CUSTOMS REGIME

(In percent)

Ordinary Trade Process & Assembling

Process w/Imported Materials Warehousing Trade

Entrepot trade by bonding activity Compensatory Trade

To understand why firms that have specialized in “processing with imported parts” 

exports have exhibited such rapid growth compared to the more sluggish performance of 

firms specializing in processing and assembly can better be understood by considering 

their respective ownership structures. More specifically, output from FIEs constitute a 

large and growing share (83% in 1995 and 94% in 2004) of the total output of Chinese 

exporting firms that specialize in “processing with imported parts”, suggesting that these 

firms’ robust growth is at least partially attributable to foreign participation. Conversely, 

SOEs have accounted for a majority (89% in 1995 and 52% in 2004) of total output from 

firms that specialize in processing and assembly, suggesting that these forms of 

ownership may hinder growth prospects of exporting firms that specialize in processing 

and assembly. 

― Page 13 of 34 ―
2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S IMPORTS TO U.S. BY CUSTOMS REGIME

(In percent)

Ordinary Trade Process & Assembling

Process w/Imported Materials Warehousing Trade

Entrepot trade by bonding activity Equipment investment by FIEs

China’s Imports from the United States ►By Customs-Regime◄ The decomposition of 

China’s imports from the United States by customs regime highlights the fact that 

ordinary trade accounts for the clear 

majority (over half) of China’s overall 

imports from the United States. Moreover, it 

shows that non-ordinary trade imports have 

been diversified among processing (both 

assembly and from imported parts), FIE 

equipment investment, warehousing, and 

entrepot activity. 

The fact that the “equipment investment by 

FIEs” share of overall imports has declined 

suggests that imports for start-up equipment 

by new FIEs may be slowing, and 

substituted for imports from existing and expanding FIEs. 

1995 2004 Composition Change 

(1995-2004)

Share of Imports 100.0 100.0

Ent

Pr

Pr

repot trade by bonded area 0.0 6.0 6.0

ocess & assembing 5.4 7.1 1.7

ocess w/imported materials 17.5 17.6 0.0

Ordinary trade 55.2 54.6 -0.6

Warehousing trade 4.1 3.1 -1.0

Equipment/machinery investment by FIEs 12.7 7.9 -4.8

Other 5.1 3.9 -1.2

Table 6: Compostion of China Imports to U.S. by Customs Regime

(In percent of total import value)

Table 6 identifies that “entrepot trade by bonded area” has been the most important driver 

of import growth from 

the United States in the 

regime category, over 

the past decade. Its 

share of overall 

imports from the 

United States grew by 

6 percentage points 

from 1995 to 2004. 

Comparing the Structure and Growth Patterns of China’s Export and Import Flows 

to/from the United States ►By Customs Regime ◄China’s exports and imports to/from 

the United States in this classification depended on considerably different factors. For 

example, imports from the United States were more diversified than exports. Also, export 

growth most heavily depended on processing with imported materials, while import 

growth most heavily depended on entrepot trade by bonded area. 

Part II, Section 4. Decomposing China-US Trade by Product Type:

Now that China’s trade flows with the United States have been effectively decomposed 

according to firm characteristics such as ownership, customs regime, and incentive 

structure, we turn to the types of products being traded to complete our understanding of 

the structural changes that have unfolded in U.S.-China trade. It shall be shown that 

China’s exports to the United States and imports from the United States have been 

primarily comprised of a large and growing share of machinery and electronic products 

(thereby confirming anecdotal evidence of China’s emerging position on the global 

― Page 14 of 34 ―
supply chain). Moreover, China’s imports from the United States have been most 

prominently driven by growth in yellow soybean imports. 

Share of Exports: 1995 2004 Composition Change (1995

2004)

uclear reactors, boilers, machinery, parts thereof 7.4 24.0 16.6

lectric machinery, sound, & TV equipment 14.9 21.3 6.4

Furniture, bedding, lamps, prefab beds 4.3 6.1 1.8

Articles of iron and steel 2.0 3.4 1.4

Vehicles and related parts, non-rail/tram 2.1 3.0 0.8

extile art, needlecraft sets, worn text art 1.3 1.9 0.5

otal 32 60 28

Table 7: Compostion of China Exports to U.S. by HS-2 Product Category

(In percent of total export value)

N

E

T

Subt

-

China’s Exports to the United States ►By Product-Type◄ China’s top 2004 exports to 

the United States are identified in Appendix III. To understand what product drivers 

have led overall export growth to the United States, however, we decompose China’s U.S. 

bound exports into the broad harmonized system’s two digit categories, and identify 

where the largest market share gains have been made over the past decade (Appendix IVA). Table 7 consolidates those findings by identifying the largest of these changes, and 

sorting them according to magnitude. As can be seen, China’s exports to the United 

States in the “nuclear reactor, boilers and machinery” and “electronic machinery, sound 

& TV equipment” categories have grown the fastest, and accounted for approximately 

half of all of China’s exports to the United States by 2004. A deeper investigation into the 

underlying source of 

growth within these 

identified categories 

suggests that “nuclear 

reactor, boilers and 

machinery” predominantly 

consist of computers and 

computer part, while 

“electronic machinery, 

sound & TV equipment” exports to the United States mainly consist of mobile phones 

and television parts. 

Share of Imports: 1995 2004 Composition Change (1995-

2004)

Oil seed, misl. grains, seens, fruit/plant, etc 0.5 7.6 7.1

Electric machinery, sound, & TV equipment 11.8 17.1 5.3

O

Subt

ptic, photo-medical or surgical instruments 4.8 7.8 3.0

Organic chemicals 2.7 5.1 2.4

Misl. Chemical products 1.2 2.5 1.3

Pulp of wood, waste paper, paperboard, etc 1.7 2.9 1.2

otal 23 43 20

Table 8: Compostion of China Imports from the U.S. by HS-2 Product Category

(In percent of total export value)

China’s Imports from the United States ►By Product-Type◄ China’s top 2004 imports 

from the United States are identified in Appendix III. Appendix IV-B identifies market 

share gains of China’s imports from the United States according to their HS-2 category in 

the past decade. As can been seen, the largest increases originated from the “oil seed, 

grain, and fruits/plants” 

category (mainly soybeans), 

as well as from “electrical 

machinery, sound, and TV 

equipment” (mainly 

integrated circuits). Table 8 

consolidates the major 

import drivers, and 

compares the magnitude of their market share increases. 

Comparing China’s Exports and Imports to/from the United States ►By Product-Type◄ 

In this section, we have identified the principle export and import drivers of China’s trade 

with the United States according to 2-digit HS product-type specifications. The most 

noteworthy observation was that “electronic machinery, sound & TV equipment” proved 

to be a large and growing component in both export and import categories. This conforms 

to our expectations, given China’s increasingly integrated position on the global 

manufacturing supply chain of electronic goods, and is worthy of further study. 

― Page 15 of 34 ―
PART III: THE MULTI-DIMENSIONAL DECOMPOSITION OF 

PRODUCT DRIVERS IN U.S. – CHINA TRADE 

Part II of this investigation helped expose two different, yet important sets of information. 

First, it profiled the ownership, incentive scheme, and customs regime characteristics of 

Chinese firms which have most dramatically influenced bilateral trade flows over the 

considered period. Second, it identified major product categories that have been 

instrumental in driving trade flows between the United States and China over the past 

decade. 

This part of the analysis will build upon those findings by decomposing U.S.-China trade 

by multiple dimensions, in order to gain a more comprehensive understanding of 

important factors that have driven bilateral trade flows. To do so, it will simultaneously 

decompose China’s fastest growing export and import product drivers (which accounted 

for 60% and 46% of China’s total 2004 trade with the United States, respectively), 

according to their ownership, regime, and incentive structures. Ultimately, the multidimensional structures of these product drivers will be compared against (1) the 

composition of China’s total trade with the United States, as well as (2) the structure of 

the other important product trade drivers in U.S.-China trade. 

Part III, Section 1. Distinctive Features of China’s Export Product Drivers to the U.S. 

► Relative to China’s Overall Exports to the U.S. ◄

Table 9 below summarizes the major export-related findings of Part II by consolidating 

the products and firm characteristics that influenced China’s overall exports to the United 

States over the last ten years. Each category grouping is sorted by order of the magnitude 

of compositional changes over the considered period. By consolidating these findings, 

and looking at the market share size and growth patterns from 1995 to 2004, several 

important themes emerge. Firms that are foreign-owned (ownership), specialized in 

processing with imported materials and ordinary trade (customs regime), and/or that are 

operating out of ETDZs or HTIDZs represent a high and growing share of overall exports 

to the United States. Consequently, we would expect these characteristics to play an 

important role in the composition and structural changes associated with China’s fastest 

growing product category exports to the United States in the considered time period. 

Composition Compositi

1995 2004 Change 1995 2004 Change

By HS-2 Product Category (Total)

on 

0 By Customs Regime

Nuclear Reactors, boilers, machinery, and parts there 7 24 17 Process w/imported materials 49 53 4

Electronic Machinery, sound, and TV equipment 15 21 6 Entrepot trade by bonded area 0 1 1

Furniture, bedding, lamps, prefab beds 4 6 2 Ordinary trade 30 31 1

Iron and Steel Articles 2 3 1 Warehousing trade 1 1 1

Vehicles and related parts 2 3 1 Other 0 0 0

Textile Art, needlecraft, worn text art 1 2 1 Compensatory trade 0 0 0

Subtotal 32 60 ... Process & assembing 20 14 -6

Subtotal 100 100 ...

By Ownership Structure Incentive-Scheme Based

Foreign Invested 45 66 21 HTIDZs 1 7 6

Private 0 8 8 ETDZs 5 10 5

Collective 1 4 3 Bonded Areas 0 3 3

SOEs 53 22 -32 SEZs 11 6 -6

Subtotal 100 100 ... Subtotal 17 26 ...

Non-Incentive Scheme Based, Total 83 74 -8

Table 9: Determinants of Export Growth in China-U.S. Trade, 1995 & 2004

(In percent of total export value)

― Page 16 of 34 ―
Appendix-V serves as an effective tool to decompose the multi-dimensional 

characteristics of China’s top product export categories, as it disaggregates each of the 

top HS-2 categories according to ownership, customs regime, and incentive scheme 

characteristics. More specifically, it decomposes export product drivers by the value of 

the exported products (in Appendix V-A), by the share of each categories’ component 

relative to the HS-2 product category exports (in Appendix V-B), and by share of each 

component relative to China’s overall exports to the United States (in Appendix V-C). 

The last columns in Appendices V-B and V-C also identify associated market share 

changes. 

Nuclear Reactors, Boilers, Machinery, and Parts Thereof (Machinery, HS-84): China’s 

exports in this category represented the largest and fastest growing source of exports to 

the United States in the considered ten years. Comprised mainly of computers, office 

products, and associated parts, this product category accounted for nearly a quarter (24%) 

of all China’s exports to the United States in 2004, compared to only 7 percent in 1995. 

By comparing the structure of China’s machinery exports (Appendix V) to the structure 

of China’s overall exports to the United States in the same years (Table 9), we find that 

many of our expectations of major category drivers to have been confirmed. In particular, 

both sets of exports are (1) dominated by a high and growing concentration of foreigninvested enterprises, (2) predominantly specialized in processing with imported materials, 

and (3) have the highest concentrations of products exporting through HTDZs incentive 

systems. Unique structural differences, however, are highlighted below: 

► Greater share of exports going through HTIDZ incentive-scheme systems (16% vs 6% in 2004)

► Greater reliance on HTIDZ exports for growth (15% mkt share growth, vs. 6%, 1995-2004)

Distinctive Features of China's "Nuclear Reactors, Boilers, Machinery

and Parts" Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

► Greater dominance by FIEs (84% vs 67% in 2004)

► Greater reliance on “processing w/imported materials” (75% vs 53% in 2004)

► Greater share of exports through incentive-schemes (32% vs. 26% in 2004)

► Greater reliance on “processing w/imported materials” for growth (10% mkt share growth vs. 4%, 1995-2004)

Electrical Machinery, Sound & TV Equipment, Etc. (HS-85): China’s exports in this 

category represented the second largest source of export growth to the United States in 

the considered ten years. Comprised mainly of radio, telephone, and handset transmitters, 

this product category accounted for over a fifth (21%) of all China’s exports to the United 

States in 2004, compared to nearly 15 percent in 1995. 

By again comparing our findings from Appendix V to those in Table 9, we note that, like 

China’s overall exports to the United States, its electrical machinery exports are (1) 

dominated by a high and growing concentration of foreign-invested enterprises; (2) 

predominantly specialize in processing with imported materials; and (3) have the highest 

concentrations of products exporting through ETDZs and HTDZs. Important differences, 

however, are identified below. 

― Page 17 of 34 ―
► Significantly greater share of exports going through ETDZs incentive-scheme systems (20% vs 6.5% in 2004)

► Greater reliance on HTIDZ exports for growth (16% mkt share growth, vs. 5%, 1995-2004)

Distinctive Features of China's "Electrical Machiners, Sound,

and TV Equipment" Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

► Greater reliance on “processing w/imported materials” (73% vs 53% in 2004)

► Higher share of exports going through incentive-schemes (42% vs. 26% in 2004)

► Greater dominance by FIEs (79% vs 67% in 2004)

► Greater reliance on “processing w/imported materials” for growth (13% mkt share growth vs. 4%, 1995-2004)

Furniture, Bedding, and Lamps (HS-94): China’s exports in this category represented 

the third largest source of export growth product category accounted for 6% of China’s 

overall exports to the United States in 2004, compared to nearly 4 percent in 1995. 

While similar to China’s overall exports to the United States in (1) its concentration of 

exports originating from FIEs; (2) predominant specialization in processing with 

imported materials; and (3) high concentrations of products exported through ETDZs and 

HTDZs, its export composition also differs in several ways: 

► Significantly lower share of exports going through incentive-schemes (12% vs. 26% in 2004)

Distinctive Features of China's "Furniture, Bedding, and Lamps"

Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

► Greater reliance on “ordinary trade” for growth (7% mkt share growth vs. 1%, 1995-2004)

► Modestly greater dominance by private firms (10% vs 8% in 2004)

► Greater reliance on ordinary trade (44% vs 31% in 2004) than “processing w/imported materials”

Iron and Steel Products (HS-73): China’s exports in this category represented the fourth 

largest source of export growth to the United States in the considered ten years. 

Comprised mainly of miscellaneous iron and steel products, including stove tops, this 

product category accounted for 3% of China’s overall exports to the United States in 

2004, compared to nearly 2 percent in 1995. 

China’s iron and steel products exports are considerably different than China’s overall 

exports, most notably in the fact that they are: 

► Greater reliance on “ordinary trade” (47% vs. 31% in 2004) and "other" (32% vs. 0% in 2004)

► Have a significantly lower share of exports going through incentive-schemes (8% vs. 26%) in 2004

Distinctive Features of China's "Iron and Steel Product"

Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

► Significantly less dominated by FIEs (32% vs. 66% in 2004)

► Originated from a significantly higher concentration of SOE exports (71% vs. 53% in 1995)

► Greater reliance on “other" regime types for growth (18% mkt share growth vs. 0%, 1995-2004)

― Page 18 of 34 ―
Vehicles and Related Parts (HS-87): China’s exports in this category represented the 

fifth largest source of export growth to the United States in the considered ten years. 

Comprised mainly of vehicle parts such as wheels, brakes, and radiators, this product 

category accounted for 3% of China’s overall exports to the United States in 2004, 

compared to nearly 2 percent in 1995. 

While similar to China’s overall exports to the United States in its major concentration of 

exports originating from FIEs, China’s U.S.-bound exports of vehicle parts are 

distinguished by the following: 

► Lesser dependence on “processing with imported parts” (24% vs. 53% in 2004)

► More dependant on “other" regime types for growth (23% mkt share growth vs. 0%, 1995-2004)

► Lesser dependence on trade going through incentive systems (15% vs. 26% in 2004)

► Significantly less dominated by FIEs (35% vs. 66% in 2004)

► Greater reliance on privates and COEs for growth (11% and 4% mkt share growth vs. 8% and 3%, 1995-2004)

Distinctive Features of China's "Vehicles and Related Parts"

Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

Textile Art, needlecraft, and Worn text Art (HS-63): China’s exports in this category 

represented the sixth largest source of export growth to the United States in the 

considered ten years. Comprised mainly of textiles, dress patterns, curtains, and blinds, 

this product category accounted for 2% of China’s overall exports to the United States in 

2004, compared to 1 percent in 1995. 

While similar to China’s overall exports to the United States in its major concentration of 

exports originating from FIEs, China’s U.S.-bound exports of vehicle parts are 

distinguished by the following: 

► Lesser dependence on “processing with imported parts” (12% vs. 53% in 2004)

► Greater reliance on privates for growth (17% mkt share growth vs. 8%, 1995-2004)

► More dependant on ETDAs for growth (8% mkt share growth vs. 0%, 1995-2004)

► Lesser dependence on exports from FIEs (24% vs. 66% in 2004);

► Greater reliance on ordinary trade (61% vs. 31% in 2004);

► Lesser dependence on trade going through incentive systems (15% vs. 26%) in 2004.

Distinctive Features of China's "Vehicles and Related Parts"

Exports to the United States, 1995-2004

(Relative to China's Overall Exports to the United States)

► Greater dependence on exports from private enterprises (17% vs. 8% in 2004)

― Page 19 of 34 ―
Part III, Section 2. Distinctive Features of China’s Import Product Drivers from the U.S. 

► Relative to China’s Overall Imports from the U.S. ◄

As was done in the previous section, Table 10 below summarizes the major importrelated findings of Part II by consolidating the products and firm characteristics that 

played a role in influencing China’s overall imports from the United States over the last 

ten years. Each category grouping is sorted by the magnitude of compositional changes 

over the considered period. By consolidating these findings, and looking at the market 

share size and growth patterns from 1995 to 2004, several important themes emerge. 

Firms that were foreign-owned, specialized in processing with imported materials and 

ordinary trade, and/or that operated in ETDAs and bonded areas dominated China’s 

import market from the United States in 2004. Consequently, we would expect many of 

these factors to play a role in the composition and structural changes associated with 

China’s fastest growing product category imports from the United States identified in the 

considered time period. 

Composition Composition

1995 2004 Change 1995 2004 Change

By HS-2 Product Category (Total) By Customs Regime

Oil seeds, misc grain/seed/fruit/plant 1 11 10 Entrepot trade by bonded area 0 6 6

Electronic Machinery, sound, and TV equipment 12 17 5 Process & assembing 5 7 2

Optic, Photo, Medic or Surgical Instruments 5 8 3 Process w/imported materials 18 18 0

Organic Chemicals 3 5 2 Ordinary trade 55 55 -1

Misl. Chemical Products 1 3 1 Warehousing trade 4 3 -1

Pulp of wood, waste paper, paperboard 2 3 1 Equipment/machinery investment by 13 8 -5

Subtotal 23 46 Other 5 4 -1

Subtotal 100 100

By Ownership Structure Incentive-Scheme Based, Total

Foreign Invested 33 52 19 Economic & Technological Developm 7 17 1

Private 0 8 8 Bonded Areas 1 10 9

Collective 1 5 5 High-Technology Industry Developm

0

e 1 4

SOEs 66 34 -32 Special Economic Zone (SEZs) 10 7 -3

Subtota

3

l 100 100 Subtotal 19 38 ...

Non-Incentive Scheme Based, Total 81 62 -19

Table 10: Determinants of Import Growth in China-U.S. Trade, 1995 & 2004

(In percent of total export value)

Again, we rely on the findings in Appendix VI(A-C) to profile the multi-dimensional 

composition of China’s top product import (from the U.S.) categories and compare those 

results against China’s broader imports (from the U.S.) in Table 10. 

Oil seeds & misl. grains/fruits/plants (HS-12): China’s imports in this category 

represented the largest source of import growth from the United States in the considered 

ten years. Comprised predominantly by yellow soybeans, this product category accounted 

for nearly a quarter (11%) of all China’s imports from the United States in 2004, 

compared to 1 percent in 1995. 

Notable similarities between the composition of this product category's imports from the 

U.S., relative to China’s overall imports from the United States, lies in (1) their mutual 

dependence on FIEs to import approximately half of overall 2004 imports and (2) their 

dependence on ETDAs as the largest incentive-based source from through which imports 

are brought. However, characteristics that distinguish yellow soybean imports from 

overall U.S. imports into China include the following: 

― Page 20 of 34 ―
(Relative to China's Overall Imports from the United States)

Distinctive Features of China's "Oil seeds & misl. grains/fruits/plants"

Imports from the United States, 1995-2004

► Considerably less reliant on FIEs for growth (25% mkt share loss vs. 19% growth, 1995-2004)

► Greater dominance by private firms (19% vs. 8% in 2004) and COEs (10% vs. 5% in 2004)

► Signficantly smaller (and falling) share of imports going through incentive-schemes (18% vs. 38% in 2004)

► Considerably Greater reliance on “ordinary trade” operations (99% vs. 55% in 2004)

► Greater reliance on private and COEs for growth (19% and 9% mkt share gain vs. 9% and 5%, 1995-2004)

Electrical Machinery, Sound & TV Equipment, Etc. (HS-85): China’s imports in this 

category represented the second largest source of import growth from the United States in 

the considered ten years. Comprised mainly of integrated “monolithic digital” circuits, 

this product category accounted 17% of all China’s imports to the United States in 2004, 

compared to 12 percent in 1995. 

Like China’s overall imports from the United States, its electrical machinery imports are 

both dominated by a high and growing concentration of foreign-invested enterprises, and 

are predominantly relying in imports from ETDZs. The main differences, however, lie in 

the following factors: 

► Significantly greater share of imports going through bonded area incentive-scheme systems (21% vs 10% in 2004)

► Greater reliance on bonded areas zones for growth (20% mkt share growth, vs. 9%, 1995-2004)

► Greater reliance on “processing and assembly” for growth (14% mkt share growth vs. 2%, 1995-2004)

and TV Equipment" Imports from the United States, 1995-2004

(Relative to China's Overall Imports from the United States)

Distinctive Features of China's "Electrical Machiners, Sound,

► Greater dominance by FIEs (77% vs 52% in 2004)

► Greater reliance on “processing w/imported materials” for growth (20% mkt share growth vs. 0%, 1995-2004)

► Greater reliance on “processing w/imported materials” (36% vs. 18%) & “processing and assembly” (21% vs. 7%) in 2004

► Higher share of imports going through incentive-schemes (59% vs. 38% in 2004)

Optic, Photo, Medic or Surgical Instruments (HS-90): China’s imports in this category 

represented the third largest source of import growth from the United States in the 

considered ten years. Comprised mostly of optical measuring equipment, this product 

category accounted for 8% of China’s overall imports from the United States in 2004, 

compared to 5 percent in 1995. 

While similar to China’s overall imports from the United States in (1) its high 

concentration of imports from FIEs, (2) predominant specialization in entrepot trade by 

bonded area, and (3) high concentrations of products imported through ETDZs, its import 

composition also differs in several ways, namely: 

► Greater reliance on "entrepot trade by bonded area" for growth (10% mkt share growth vs. 6%, 1995-2004)

► Greater reliance on "equipment investment by FIEs" for growth (4% mkt share growth vs. -5%, 1995-2004)

► Greater reliance on bonded areas zones for growth (14% mkt share growth vs. 9%, 1995-2004)

Distinctive Features of China's "Optic, Photo, Medic or Surgical Instruments"

Imports from the United States, 1995-2004

(Relative to China's Overall Imports from the United States)

► Greater reliance on “equipment/material investment by FIEs” (22% vs. 8% in 2004)

― Page 21 of 34 ―
Organic Chemicals (HS-29): China’s imports in this category represented the fourth 

largest source of import growth to the United States in the considered ten years. 

Comprised mainly of ethylene glycol and styrene, this product category accounted for 5% 

of China’s overall imports from the United States in 2004, compared to 3 percent in 1995. 

Despite the fact that the FIEs and bonded areas represent an important source of trade for 

U.S. total and organic chemical imports, the structure of China’s organic chemicals 

imports is generally quite different: 

► Higher share of “entrepot trade by bonded area" (13% vs. 6% in 2004)

► Greater reliance on “entrepot trade by bonded area" for growth (13% vs. 6% in 2004)

► Greater reliance on private for growth (18% mkt share gain vs. 8%, 1995-2004)

Distinctive Features of China's "Organic Chemicals"

Imports from the United States, 1995-2004

(Relative to China's Overall Imports from the United States)

► Less dominated by FIEs (37% vs. 52% in 2004)

► Greater dominance by private enterprises (18% vs. 8% in 2004)

Misl. Chemical Products (HS-38): China’s imports in this category represented the fifth 

largest source of import growth from the United States in the considered ten years. 

Comprised mainly of polymethane, polyphenyl, and isocynate chemicals, this product 

category accounted for 3% of China’s overall imports from the United States in 2004, 

compared to 1 percent in 1995. 

While similar to China’s overall imports from the United States in its major concentration 

of imports originating from FIEs an private enterprises, and engaging in “ordinary trade”, 

China’s imports of miscellaneous chemicals are distinguished by their: 

► Greater reliance on "processing and assembly" for growth (12% mkt share growth vs. 2%, 1995-2004)

► Greater reliance on imports from bonded areas for growth (22% mkt share growth vs. 9%, 1995-2004)

Distinctive Features of China's "Misl. Chemical Products"

Imports from the United States, 1995-2004

(Relative to China's Overall Imports from the United States)

► Greater dependence on trade going through bonded area incentive systems (23% vs. 10% in 2004).

► Greater concentration in processing and assembly (21% vs. 7% in 2004)

► Greater dependence on trade going through incentive systems (55% vs. 38% in 2004)

Pulp of wood, waste paper, paperboard (HS-47): China’s exports in this category 

represented the sixth largest source of import growth from the United States in the 

considered ten years. Comprised mainly of paper and paperboard, this product category 

accounted for 3% of China’s overall imports from the United States in 2004, compared to 

2 percent in 1995. 

While similar to China’s overall imports from the United States in its major concentration 

of FIE and private firm imports, as well as its concentration in ordinary trade, China’s 

imports of paper and paper products are distinguished by: 

Distinctive Features of China's "Pulp of Wood, Waste Paper, Paperboard"

Imports from the United States, 1995-2004

(Relative to China's Overall Imports from the United States)

► Greater share of imports from ordinary trade (82% vs. 55% in 2004)

► Smaller share of imports going through incentive systems (10% vs. 38% in 2004)

― Page 22 of 34 ―
Part III, Section 3. Distinctive Features of China’s Export Product Drivers to the U.S. 

► Relative to China’s Other Export Product Drivers ◄

This part of the analysis will build upon previous findings by comparing the 

compositions of China’s fastest growing export product categories to the United States 

against each other, to gain a better understanding of the most important factors driving 

China’s export products to the United States in the considered period. To do so, attention 

will again be focused on China’s top six exported product drivers, given that they 

represented the largest (60% in 2004) and fastest growing share of China’s overall 

exports with the United States. 

The figure on the following page provides us with a comparative view of the structural 

compositions of China’s six largest product category exports to the United States in 2004. 

Each product categories’ structural composition is shown according to the three major 

classifications that were considered in the previous analysis, which include ownership, 

regime, and incentive scheme. 

As can be seen, China’s fastest growing product exports to the United States can 

essentially be subdivided into two categories, each of which being generally similar in 

structural composition: 

Category 1: HS-84&85: Nuclear Reactors, Boilers, Machinery, Electrical Machinery, 

Sound & TV Equipment: The first of these categories consists of the HS-84 and HS-85 

products, which predominantly comprise of computers and their parts, office products 

and their parts, as well as radio, telephone, and handset transmitters. Relative to a 

weighted average of the entire six product exports, their composition is distinguished by a: 

Ownership: 

• Considerably higher share of exports by FIEs 

• Lower share of exports by SOEs and private enterprises 

Customs Regime:

• Considerably higher share of exports specializing in processing w/imported materials 

• Higher share of exports specializing in processing and assembly 

• Considerably lower share of exports specializing in ordinary trade 

Incentive Scheme:

• Considerably higher share of exports traded through consolidated incentive schemes 

• Considerably higher share of exports traded through HTIDAs and bonded areas 

In addition to a broadly similar compositional structure, China’s HS-84 and HS-85 

product categories alone constitute an predominant 45% of China’s total exports to the 

United States in 2004. Category 2 exports to the U.S., which consists of HS-63,73,87,94 

(see below), only account for an additional 14% of China’s total 2004 exports to the 

United States. 

This suggests that the combined characteristics associates with Category 1 exports drivers 

play a particularly important role in influencing China’s trade with the United States. 

― Page 23 of 34 ―
DECOMPOSING CHINA’S FASTEST GROWING 2004 EXPORT 

 PRODUCT DRIVERS TO THE U.S. 

Figure A 

0% 20% 40% 60% 80% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary 

Trade

Process w/imported materials

Entrepot by 

bonded trade

Composition of China's 2004 Exports to the United States

 NUCLEAR REACTORS, BOILERS & MACHINERY (HS-84)

(In percent)

ETDA

Bonde

d Area

HTIDA

Process & 

assembling

SOEs

Non-Incentive Scheme SEZs

Figure B 

0% 20% 40% 60% 80% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary 

Trade Process w/imported materials

Entrepot by 

bonded trade

Composition of China's 2004 Exports to the United States

ELECTRIC MACHINERY, SOUND & TV EQUIPMENT (HS-85)

(In percent)

ETDA Bonded 

Area HTIDA

Process & 

assembling

SOEs

Warehousing

Non-Incentive Scheme SEZ

Figure C 

0% 20% 40% 60% 80% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary Trade

Process w/imported 

materials

Composition of China's 2004 Exports to the United States

FURNITURE, BEDDING, & LAMPS (HS-94)

(In percent)

ETDA SEZ HTIDA

SOEs

Processing &

Assembling

Non-Incentive Scheme

― Page 24 of 34 ―
DECOMPOSING CHINA’S FASTEST GROWING 2004 EXPORT 

 PRODUCT DRIVERS TO THE U.S. (...Continued) 

Figure D 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary Trade Process w/imported Other materials

Composition of China's 2004 Exports to the United States

IRON & STEEL (HS-73)

(In percent)

ETDA

Processing &

Assembling

SEZ

Other SOEs

Non-Incentive Scheme

Figure E 

0% 20% 40% 60% 80% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary Trade Process w/imported 

materials

Composition of China's 2004 Exports to the United States

VEHICLES & RELATED PARTS (HS-87)

(In percent)

ETDA

Bonde

HTIDA d Area

Other SOEs

Other

SEZ

Non-Incentive Scheme

Figure F 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary Trade

Process w/imported 

materials

Composition of China's 2004 Exports to the United States

TEXTILE ART, NEEDLECRAFT SETS, WORN TEXT ART (HS-63)

(In percent)

Non-Incentive Scheme ETDA SEZ

Process & 

assembling

SOEs Other

Other

― Page 25 of 34 ―
Category 2: HS-63,73,87,94:Textiles, Iron & Steel, Vehicles & Associated Parts, 

Furniture, Bedding, and Lamps: The second of these categories consists of HS63,73,87,94 products, which predominantly comprise of wood furniture, miscellaneous 

iron and steel products, vehicle parts, and textiles. Relative to a weighted average of the 

entire six product exports, their composition is distinguished by the opposite of those 

characteristics identified in Category 1. Specially, they are a: 

Ownership: 

• Considerably higher share of exports by SOEs and private enterprises 

• Lower share of exports by FIEs 

Customs Regime:

• Considerably higher share of exports specializing in ordinary trade 

• Considerably lower share of exports specializing in processing w/imported materials 

• Lower share of exports specializing in processing and assembly 

Incentive Scheme:

• Considerably lower share of imports traded through consolidated incentive schemes 

• Considerably lower share of exports traded through HTIDAs and bonded areas 

Part III, Section 4. Distinctive Features of China’s Import Product Drivers from the U.S. 

► Relative to China’s Overall Imports from the U.S. ◄

The figure below provides us with a comparative view of the structural compositions of 

China’s six largest product category imports from the United States in 2004. Unlike 

exports, China’s fastest growing product imports from the United States cannot easily be 

subdivided into general categories that are considerably different in structural 

composition. Rather, they can be divided into a broader set of 4 categories that each share 

a basic set of similar structural attributes. 

Category 1: HS-12&47: Oil seeds, misl grain/seed/fruit/plant, and pulp of wood, waste 

paper, paperboard: The first of these categories consists of the HS-12 and HS-47 

products, which are closer to primary products, and which predominantly comprise of 

yellow soybeans, paper, and paperboard. Relative to a weighted average of the entire six 

fastest growing product imports, their composition is distinguished by a: 

Ownership: 

• Lower share of imports from FIEs 

• Higher share of imports from COEs 

Customs Regime:

• Predominantly high share of imports specializing in ordinary trade 

• Smaller share of all other major forms of import specialization 

Incentive Scheme:

• Considerably higher share of imports traded not traded through any incentive schemes 

― Page 26 of 34 ―
Category 2: HS-29&38: Organic chemicals and misl. chemical products: The second of 

these categories predominantly consists of various imported chemicals. Relative to a 

weighted average of the entire six fastest growing product imports, their composition is 

distinguished by a: 

Ownership: 

• Higher share of imports from SOEs and private enterprises 

• Lower share of imports from FIEs 

Customs Regime:

• Lower share of imports specializing in processing with imported materials 

Incentive Scheme:

• Higher share of imports traded not traded through any incentive schemes 

Category 3: HS-85: Electrical Machinery, Sound & TV Equipment: The third of these 

categories consists mainly of integrated circuits. Relative to a weighted average of the 

entire six fastest growing product imports from the United States, its composition is 

distinguished by the following combination of attributes: 

Ownership: 

• Considerably higher share of imports from FIEs and private enterprises 

• Lower share of imports from SOEs and private enterprises 

Customs Regime:

• Considerably higher share of imports specializing in “processing with imported materials” 

and “processing and assembling” 

Incentive Scheme:

• Higher share of imports traded through incentive schemes systems (most notably bonded 

areas, ETDAs and HTDAs 

Category 4: HS-90: Optic, photo, medic or surgical instruments: The fourth and final of 

these categories consists mainly of optical measuring equipment. Relative to a weighted 

average of the entire six fastest growing product imports from the United States, its 

composition is distinguished by the following combination of attributes: 

Ownership: 

• Considerably higher share of imports from SOEs 

• Considerably lower share of imports from FIEs 

Customs Regime:

• Considerably higher share of imports specializing in “equipment investment by foreigninvested enterprise” 

Incentive Scheme:

• Lower share of imports traded through incentive schemes systems 

― Page 27 of 34 ―
DECOMPOSING CHINA’S FASTEST GROWING 2004 IMPORT 

 PRODUCT DRIVERS FROM THE U.S. 

Figure A 

0% 20% 40% 60% 80% 100%

Incentive Scheme

Regime

Ownership

FIEs Private COEs

Ordinary Trade

Process w/imported 

materials

Composition of China's 2004 Imports from the United States

 OIL SEEDS, GRAINS, OTHER SEEDS, FRUIT PLANTS (HS-12)

(In percent)

Non-incentive scheme ETDA

Bonde

d Area

SOEs

SEZ

Figure B 

0% 20% 40% 60% 80% 100%

Incentive Scheme

Regime

Ownership

FIEs

Private

COEs

Other Process w/imported materials Entrepot by 

bonded trade

Composition of China's 2004 Imports from the United States

ELECTRIC MACHINERY, SOUND & TV EQUIPMENT (HS-85)

(In percent)

ETDA Bonded Area HTIDA SEZ

Process & 

assembling

SOEs

Ordinary Trade

Non-incentive scheme

Figure C 

0% 20% 40% 60% 80% 100%

Incentive Scheme

 Regime

Ownership

FIEs Private COEs

Ordinary Trade

Process w/imported 

 materials

Entrepot by 

bonded trade

Composition of China's 2004 Imports from the United States

OPTIC, PHOTO, MEDIC OR SURGICAL INSTRUMENTS (HS-90)

(In percent)

ETDA

Bonded 

Area HTIDA

Other

Equipment/materials

 investment by FIEs

SOEs

Non-incentive scheme SEZ

― Page 28 of 34 ―
DECOMPOSING CHINA’S FASTEST GROWING 2004 IMPORT 

 PRODUCT DRIVERS FROM THE U.S. (...Continued) 

Figure D 

0% 20% 40% 60% 80% 100%

Incentive Scheme

Regime

Ownership

FIEs Private COEs

Ordinary Trade

Process 

w/imported 

materials

Entrepot by 

bonded trade

Composition of China's 2004 Imports from the United States

 ORGANIC CHEMICALS (HS-29)

(In percent)

ETDA Bonde

d HTIDA

Warehousing

trade

SOEs

Other

SEZ Non-incentive scheme

Figure E 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Incentive Scheme

Regime

Ownership

FIEs Private COEs

Ordinary Trade

Entrepot by 

bonded trade

Composition of China's 2004 Imports from the United States

 MISL. CHEMICAL PRODUCTS (HS-38)

(In percent)

Bonded Area ETDA HTIDA

Equipm

investm

by FIE

SOEs

Process &

Assembly

Process 

w/imported 

Non-incentive scheme SEZ

Figure F 

0% 20% 40% 60% 80% 100%

Incentive Scheme

Regime

Ownership

FIEs Private COEs

Ordinary Trade

Composition of China's 2004 Imports from the United States

PULP OF WOOD, WOOD PAPER, PAPERBOARD (HS-47)

(In percent)

ETDA SEZ

Warehousing

trade

Process 

w/imported 

Process 

& assembly

SOEs

Non-incentive scheme

― Page 29 of 34 ―
PART IV: THE LARGEST MULTI-DIMENSIONAL EXPORT & 

IMPORT CONTRIBUTORS TO U.S.-CHINA TRADE 

Part III of this analysis provided insight into the multi-dimensional structure of China’s 

top product exports and imports to/from the United States. Specifically, it simultaneously 

unveiled the ownership structure, customs regime, and incentive schemes associated with 

China’s top product trade drivers vis-à-vis the United States. 

While the analysis in Part III provided insight into the likely combinations of factors that 

collectively formed a profile of important trade drivers in U.S.-China trade, it fell short of 

concluding that the combination of factors were necessarily related. For example, just 

because FIE ownership, “processing with imported materials”, and HTIDA exports were 

individually considered the most important ownership/customs regime/incentive scheme 

factors influencing China’s machinery exports (see Table 9), does not necessarily mean 

that the most influential factors influencing China’s exports to the United States derived 

from the necessary combination of those factors (e.g. FIE firms specializing in the 

processing of imported materials for exporting machines through HTIDAs to the United 

States). 

In this concluding section, we utilize our previous findings to create a profile of the most 

important related factors that have contributed to overall 2004 exports and imports 

to/from the United States. Specifically, we will answer the following questions: 

 What were the characteristics of China’s most prominently traded products with 

the United States in 2004 (among China’s top HS-2 categories)? 

 What were the characteristics of China’s most prominently traded products with 

the United States in 2004? 

 Were these the same? 

To answer these questions, we will use the observations from the previous section to 

provide us with frames of reference, or “drilling points”, from which to conduct empirical 

testing on combinations of criteria. 

― CHINA’S EXPORTS TO THE UNITED STATES ―

The Multi-Dimensional Profile of China’s Most Predominant Contributor to 2004 

HS-84 Exports to the U.S: From our analysis in Part II of this study, we identified the 

fact that “nuclear reactors, boilers, machinery, and parts thereof” (HS-84) were not only 

the largest 2-digit HS contributors to China’s overall 2004 exports to the United States 

(see Appendix III), but were also the largest product driver in the considered time period. 

Specifically, their share of China’s overall exports to the United States was 24 % in 2004, 

compared to only 7% ten years before. The magnitude and robust growth associated with 

this product category’s exports to the United States inspire questions regarding the most 

prominent underlying source of these forms of exports. To answer this, we focus our 

attention on the last year for which we have data (2004), given its greatest relevance. 

― Page 30 of 34 ―
Our analysis in Part III showed that for “nuclear reactors, boilers, machinery, and parts 

thereof” (HS-84) the overwhelming majority of exports to the United States originated 

from FIEs (84%). By restricting our data set to FIEs from this product category, we drill 

deeper into our data to consider which of the customs regimes accounted for the highest 

proportion of exports in that year. As expected (based on identified trends but not 

empirically validated), “processing with imported materials” was found to be the largest 

contributor. By restricting our dataset this time to HS-84 exports from FIEs specializing 

in processing with imported materials, we assess which incentive scheme was the most 

influential (see Table 11 below). Finally, we also assess which of the specific HS 8-digit 

product types within the broader HS-84 category accounted for the greatest share of 

China’s overall exports to the United States in 2004. 

As can be seen in the table below, the multi-dimensional profile of the largest contributor 

to China’s HS-84 2004 exports to the United States were laptop computers produced by 

FIEs in Export Processing Zones (EPZs), that used imported materials. 

 

$U.S. Mil

% of Previous 

Category

% Total 

Exports to U.S.

TABLE 11: THE PROFILE OF CHINA'S LARGEST CONTRIBUTOR TO 2004 U.S.-BOUND EXPORTS

Total China Exports to U.S. 124,946

Nuclear Reactors, Boilers, Machinery, and Parts (HS-84) 29,998 24% 24%

o/w Foreign Invested Enterprises 25,281 84% 20%

o/w Processing w/imported materials 21,946 87% 18%

o/w Export Processing Zones 6,488 30% 5%

o/w "Portable computers weight <=10kg, w/at least CPU, 

keyboard, display" (HS-84713000) 5,175 58% 4%

The Multi-Dimensional Profile of China’s Most Predominant Contributor to 2004 

Overall Exports to the U.S: By repeating the above methodology (but not restricting our 

data set to HS-84 product groupings14), we arrive to an identical conclusions. Specifically, 

the combination of factors that had the most influence over China’s largest HS-2 digit 

category also had the largest influence over China’s overall 2004 exports. This 

observation is not entirely surprising, given how large a share the HS-84’s product 

category constituted relative to China’s overall exports to the United States in 2004. 

In sum, the multi-dimensional profile of the largest contributor to China’s overall (and 

HS-84) 2004 exports to the United States were laptop computers produced by FIEs in 

Export Processing Zones (EPZs), that used imported materials. 

 

14 Note that HS-85 exports to the United States were only slightly lower than HS-84, ultimately suggesting that the largest multidimensional component of China’s 2004 exports could have easily fallen in this listing. 

― Page 31 of 34 ―
― CHINA’S IMPORTS FROM THE UNITED STATES ―

The Multi-Dimensional Profile of China’s Most Predominant Contributor to 2004 

HS-84 Imports from the U.S: By repeating the methodology applied to China’s exports, 

we can also create a multi-dimensional profile of the most prominent combination of 

factors that have influenced China’s top HS-2 imports from the United States. As a 

starting point, we consider the largest HS-2 import product category from the United 

States in 2004, which, as was the case with exports, was “nuclear reactors, boilers, 

machinery, and parts thereof”, or HS-84 (see Appendix III). Next, we restrict our data to 

determine, among the HS-84 products, which combinations of ownership structure 

custom regime, incentive structure, and, HS-8 product category ultimately contributed the 

most to China’s 2004 imports from the United States. 

As can be seen in the table below, China’s “individual function” machinery and 

mechanical appliance start-up equipment from FIEs operating in ETDAs contributed the 

most to China’s top HS-2 product imports (HS-84) from the United States. 

$U.S. Mil

% of 

Previous 

Category

% Total 

Imports 

from U.S.

Total China Imports from U.S. 44,678

Nuclear Reactors, Boilers, Machinery, and Parts (HS-84) 7,836 18% 18%

o/w Foreign Invested Enterprises 4,545 58% 10%

o/w Start-up equipment investment by foreign-invested enterprise 2,253 50% 5%

o/w ETDAs 1,046 46% 2%

o/w Machine & mechanical appliances w/individual functions (HS-84798990) 589 56% 1%

TABLE 12: THE PROFILE OF CHINA'S LARGEST HS-84 CONTRIBUTOR TO 2004 IMPORTS FROM THE U.S.

The Multi-Dimensional Profile of China’s Most Predominant Contributor to 2004 

Overall Imports from the U.S: As was done on the export side, we can now repeat the 

above methodology without restricting our data set to the HS-84 category, in order to 

unveil the combination of factors that most greatly influenced China’s overall 2004 

imports from the United States. 

As can be seen in the table below, China’s imports of yellow soybeans from FIEs’ 

engaged in ordinary trade through non-incentive-based systems contributed the most to 

China’s overall 2004 imports from the United States. 

$U.S. Mil

% of 

Previous 

Category

% Total 

Imports 

from U.S.

TABLE 13: THE PROFILE OF CHINA'S LARGEST OVERALL CONTRIBUTOR TO 2004 IMPORTS FROM THE U.S.

Total China Imports from U.S. 44,678

Oil seeds, grains, other seeds, fruits & plants (HS-12) 3,392 8% 8%

o/w Foreign Invested Enterprises 1,589 47% 4%

o/w Ordinary Trade 1,557 98% 3%

o/w Non-Incentive Based System 1,178 76% 3%

o/w Yellow Soybeans (HS-12010091) 1,177 100% 3%

― Page 32 of 34 ―
In sum, the multi-dimensional profile of the largest contributor to China’s overall 2004 

imports from the United States were yellow soybeans from FIEs’ engaged in ordinary 

trade through non-incentive-based systems. This was different from the source of 

China’s most prominent HS-84 import category, which were FIE’s individual function 

machinery & mechanical appliance start-up equipment, operating in ETDAs. 

The fact that China’s single largest multi-dimensional HS-8 digit contributor to its overall 

2004 imports is different from its most important contributor within its most dominant 

HS-2 digit (HS-84) category highlights the following important point. Although China’s 

single greatest import product from the United States was yellow soybeans, the more 

diversified set of machinery imports from the United States have collectively accounted 

for a greater share of China’s overall 2004 imports from the United States. 

PART V: RECOMENDATIONS FOR FURTHER RESEARCH 

The aim of this paper was to gain an understanding of the structural developments that 

unfolded in U.S.-China trade between 1995 and 2004, which have ultimately influenced 

China’s large and growing merchandise trade surplus with the United States. In 

completing this objective, the following issues surfaced that warrant additional attention: 

• 2005 Data: 2005 customs data from China was recently released, suggesting that 

this paper could be updated to reflect newer information. 

• Inclusion of firms’ location as part of growth profile of exports and imports:

Anecdotal evidence suggests that China’s trade of specific products are clustered 

in different geographic locations. Much of the trade with the United States, for 

example, is thought to originate from firms in the southeast coast of China, while 

trade with Japanese and Korean firms is thought to be mostly concentrated in the 

northeast. The southwest and northwest, by contrast, are thought to be engaged in 

relatively less trade with China’s major trading partners. Subsequent research 

could explore the degree to which these observations are true, and could test 

whether the inclusion of firm location will add clarity to establishing a detailed 

profile of the dynamic forces at play in U.S.-China trade.

• Transportation method: The database used for this analysis also supplied data that 

describes the shipment method of trade flows (e.g. ship, air), and could add to our 

understanding of trade flow dynamics between the United States and China.

• Clarification on China’s position on global supply chain: As was shown, 

“electronic machinery, sound & TV equipment” proved to be a principle driver in 

both export and import categories to/from the United States, supporting anecdotal 

evidence of China’s position on the global supply chain of electronics. In 

subsequent research, this issue could be more thoroughly investigated; 

• Consideration of special cross-classification relationships: When investigating 

similarities/causal factors between classification types, areas that warrant 

additional attention include relationships such as imports’ “bonded areas” 

incentive schemes and “entrepot trade by bonding activity” in the customs regime 

classification. 

― Page 33 of 34 ―
REFERENCES 

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Beijing (1986-2000). 

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International Trade: Gains to Outsourcing Through Hong Kong”, Working Paper 9328, National 

Bureau of Economic Research, 2002. 

[3] Gaulier, Guillaume, Francoise Lemoine, and Deniz Unal-Keseci, “China’s Integration in East 

Asia: Production Sharing, FDI, and High-Tech Trade”, Centre d’Etudes Prospectives et 

D’Information International (CEPII), No 2005-09, June 2005. 

[4] Girma, Sourafel and Yundan Gong, “FDI, Linkages, and the Efficiency of State-Owned 

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[5] Lardy, Nicholas, China’s Unfinished Economic Revolution, Brookings Institution Press, 1998. 

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[7] Mastel, Greg, The Rise of the Chinese Economy, ME Sharpe, 1997. 

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Cambridge University Press, 1996. 

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Panel 1, “The Chinese Economy: Current Trends and Future Challenges”, February 12-13, 2004. 

[10] Rodlauer, Markus and Wanda Tseng, China-Competing in the Global Economy, 

International Monetary Fund, 2003. 

[11] Rosen, Daniel H., Behind the Open Door-Foreign Enterprises in the Chinese Marketplace, 

Institute for International Economics, January 1999. 

[12] Von Claus Knoth, Eingereicht, “Special Economic Zones and Economic Transformation-The 

Case of the People’s Republic of China”, Dissertation from University of Konstanz, May 2000. 

[13] Yao, Shunli, Judith Dean, Alexander Hammer, and Zhi Wang, “Documentation on China 

Foreign Trade Data 1995 – 2004”, USITC internal paper (draft), 2006. 

[14] Yuhua, Yan, “China’s Economic Transition – On the Road to the Market Economy”, The 

Dilemmas of Economic Policy and Development, Poland, Radom, 2005. 

― Page 34 of 34 ―
APPPENDIX I 

Figure A

CHINA'S EXPORT MARKET, BY COUNTRY (1995 & 2004)

(In millions of U.S. Dollars)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

US 

Hong Kong

Japan

Korea (South)

Germany

Netherlands

UK

Taiwan

Singapore

France

Italy

Russia

Australia

Canada

Malaysia

Indonesia

Thailand

2004 1995

Figure B

CHINA'S IMPORT MARKET, BY COUNTRY (1995 & 2004)

(In millions of U.S. Dollars)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Japan

Taiwan

South Korea

US

Germany

Malaysia

Singapore

Russia

Hong Kong

Australia

Thailand

France

Canada

Indonesia

taly

UK

Natherlands

Australia

2004 1995
 

APPENDIX II 

Disaggregating China-U.S. Trade by 

Enterprise Type, Customs Regime, and Incentive Scheme 

(1995–2004 ) 

CHINA’S EXPORTS TO THE U.S. CHINA’S IMPORTS FROM THE U.S.

(A) (B) 

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S EXPORTS TO U.S. BY ENTERPRISE TYPE

(In percent) SOE FIE

COE Private

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

VALUE OF CHINA'S IMPORTS TO U.S.

(By share of enterprise type) SOE FIE

COE Private

 

(C) 

 

(D) 

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S EXPORTS TO U.S. BY INCENTIVE SCHEME

(In percent)

SEZs

HTIDZs ETDZs

No Scheme Bonded Areas

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S IMPORTS FROM U.S. BY INCENTIVE SCHEME

(In percent)

SEZs

HTIDZs ETDZs

No Scheme Bonded Areas

 

 (E) 

 

(F) 

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S EXPORTS TO U.S. BY CUSTOMS REGIME

(In percent)

Ordinary Trade Process & Assembling

Process w/Imported Materials Warehousing Trade

Entrepot trade by bonding activity Compensatory Trade

2004200320022001200019991998199719961995

140

120

100

80

60

40

20

0

140

120

100

80

60

40

20

0

CHINA'S IMPORTS TO U.S. BY CUSTOMS REGIME

(In percent)

Ordinary Trade Process & Assembling

Process w/Imported Materials Warehousing Trade

Entrepot trade by bonding activity Equipment investment by FIEs

Source: China’s official customs data. 
Value % of Total Value % of Total

1 Nuclear Reactors, Boilers, Machinery Etc.; Parts (HS-84) 1,840 7% 30,000 24%

2 Electric Machinery Etc; Sound Equip; Tv Equip; Pts (HS-85) 3,690 15% 26,670 21%

3 Furniture; Bedding Etc; Lamps Nesoi Etc; Prefab Bd (HS-94) 1,074 4% 7,636 6%

4 Toys, Games & Sport Equipment; Parts & Accessories (HS-95) 2,278 9% 6,364 5%

5 Footwear, Gaiters Etc. And Parts Thereof (HS-64) 3,347 14% 5,956 5%

6 Articles Of Iron Or Steel (HS-73) 497 2% 4,210 3%

7 Plastics And Articles Thereof (HS-39) 968 4% 3,700 3%

8 Vehicles, Except Railway Or Tramway, And Parts Etc (HS-87) 529 2% 3,688 3%

9 Apparel Articles And Accessories, Not Knit Etc. (HS-62) 1,763 7% 3,475 3%

10 Leather Art; Saddlery Etc; Handbags Etc; Gut Art (HS-42) 1,265 5% 3,169 3%

11 Apparel Articles And Accessories, Knit Or Crochet (HS-61) 523 2% 2,408 2%

12 Textile Art Nesoi; Needlecraft Sets; Worn Text Art (HS-63) 330 1% 2,331 2%

13 Optic, Photo Etc, Medic Or Surgical Instrments Etc (HS-90) 543 2% 2,267 2%

14 Railway Or Tramway Stock Etc; Traffic Signal Equip (HS-86) 301 1% 1,556 1%

15 Wood And Articles Of Wood; Wood Charcoal (HS-44) 136 1% 1,480 1%

16 Organic Chemicals (HS-29) 331 1% 1,391 1%

17 Tools, Cutlery Etc. Of Base Metal & Parts Thereof (HS-82) 250 1% 1,205 1%

18 Iron And Steel (HS-72) 165 1% 1,124 1%

19 Rubber And Articles Thereof (HS-40) 147 1% 1,119 1%

20 Miscellaneous Articles Of Base Metal (HS-83) 187 1% 1,103 1%

Subtotal 20,165 82% 110,854 89%

TOTAL 24,713 124,948

Value % of Total Value % of Total

1 Nuclear Reactors, Boilers, Machinery Etc.; Parts (HS-84) 3,225 7,837 18%

2 Electric Machinery Etc; Sound Equip; Tv Equip; Pts (HS-85) 1,904 7,627 17%

3 Optic, Photo Etc, Medic Or Surgical Instrments Etc (HS-90) 776 3,475 8%

4 Oil Seeds Etc.; Misc Grain, Seed, Fruit, Plant Etc (HS-12) 73 3,392 8%

5 Aircraft, Spacecraft, And Parts Thereof (HS-88) 799 2,522 6%

6 Plastics And Articles Thereof (HS-39) 779 2,385 5%

7 Organic Chemicals (HS-29) 431 2,271 5%

8 Cotton, Including Yarn And Woven Fabric Thereof (HS-52) 964 1,776 4%

9 Pulp Of Wood Etc; Waste Etc Of Paper & Paperboard (HS-47) 271 1,299 3%

10 Miscellaneous Chemical Products (HS-38) 189 1,117 3%

11 Iron And Steel (HS-72) 135 879 2%

12 Raw Hides And Skins (No Furskins) And Leather (HS-41) 227 775 2%

13 Cereals (HS-10) 1,476 649 1%

14 Copper And Articles Thereof (HS-74) 262 619 1%

15 Vehicles, Except Railway Or Tramway, And Parts Etc (HS-87) 270 588 1%

16 Paper & Paperboard & Articles (Inc Papr Pulp Artl) (HS-48) 400 579 1%

17 Fertilizers (HS-31) 1,311 531 1%

18 Inorg Chem; Prec & Rare-Earth Met & Radioact Compd (HS-28) 431 509 1%

19 Articles Of Iron Or Steel (HS-73) 177 415 1%

20 Aluminum And Articles Thereof (HS-76) 169 389 1%

Subtotal 14,272 39,632 89%

TOTAL 16,124 44,679

1995 2004

Rank 

(2004) Product

Rank 

(2004) Product

Appendix III: Decomposing China's Top 20 Traded Products w/the United States

(In Millions of U.S. Dollars)

CHINA'S EXPORTS TO THE U.S.

CHINA'S IMPORTS FROM THE U.S.

1995 2004
APPPENDIX IV 

-10

-5

0

5

10

15

20

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 80 83 86 89 92 95 98

HS Classification

Nuclear reactors, boilers, & machinery 

(17%)

Furniture, 

bedding, 

lamps, 

prefab beds 

(1.8%)

Footwear, gaiters, and parts thereof 

(-8.8%)

Articles of iron 

or steel (1.4%)

Leather art; saddlery, handbags, gut 

art Toys, games & sport 

equipment; parts & accessories

(-1.7%)

Electric machinery, sound 

& TV equipment 

(6% ) 

Apparel articles and accessories, not knit 

 (-4.4%)

Wood and articles of wood

(1% ) Textile art, needlecraft 

sets, worn text art

(1%)

Vehicles, 

except 

railway or 

tramway, 

and parts 

thereof

(0.8%)

Figure A

Composition Shifts (Value)

Share of China's 2004 Exports Going to U.S. - Share of China's 1995 Exports Going to U.S.

(By HS2 Classification, in percent)

-10

-5

0

5

10

15

20

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 80 83 86 89 92 95 98

HS Classification

Optic, photo 

medic or surgical 

instruments

(3.6%)

Iron and steel

(1.1%)

Nuclear reactors, boilers, 

machinery parts

(-2.5%)

Electric machinery, 

sound & TV 

equipment 

(5.3% ) 

Animal or vegetable fats,

 oils, waxes

(-2.8%)

Pulp of wood, 

waste 

paper, 

paperboard

(1.2%)

Misl. chemical 

products

(1.3%)

Fertilizers

(-6.3%)

Organic chemicals

(2.4%)

Oil seeds, misl grains, seed, fruit, plant

(7.1%)

Cerials

(-7.7%)

Paper, 

paperboard & 

articles 

(-1.2%)

Cotton, 

including yarn 

and woven 

fabric

(-2.0%)

Figure B

Composition Shifts (Value)

Share of China's 2004 Imports Coming From U.S. - Share of China's 1995 Imports Coming From U.S.

(By HS2 Classification, in percent)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Total Exports 24,713 26,709 32,716 37,964 42,015 52,141 54,271 69,949 92,472 124,946

Nuclear reactors, boilers, machinery & parts (HS-84) 1,840 2,440 3,482 4,598 5,277 6,854 7,337 12,056 21,361 30,000

SOEs (1) 650 718 846 1,114 1,359 1,589 1,552 2,238 2,652 3,458

Foreign Invested (4) 1,150 1,655 2,555 3,405 3,783 5,026 5,371 9,208 17,708 25,281

Collective (5) 39 68 80 76 131 218 361 466 501 496

Private (6) 0 0 1 1 2 19 51 141 498 763

Other 00011122 2 2

Ordinary trade (10) 300 355 430 506 714 1,014 1,145 1,644 2,167 2,901

Process & assembling (14) 288 387 429 558 766 811 910 1,863 3,450 4,163

Process w/imported materials (15) 1,192 1,636 2,541 3,407 3,673 4,939 5,166 8,225 15,423 22,444

Warehousing trade (33) 59 61 24 5 8 38 21 48 68 82

Entrepot trade by bonded area (34) 0 0 58 121 114 49 93 273 251 407

Other 11013123 2 3

Special Economic Zone 289 395 732 809 505 763 764 623 823 1,041

Economic & Technological Development Area 151 159 160 281 336 429 459 1,148 1,671 2,101

High-Technology Industry Development Area 13 30 291 421 513 936 988 2,041 4,518 4,743

Bonded Area 5 60 260 378 683 865 575 987 1,564 1,758

Other 1,382 1,796 2,040 2,709 3,240 3,860 4,551 7,258 12,786 20,358

Electric machinery, sound & TV equip, & parts (HS-85) 3,690 4,084 4,853 5,882 7,200 9,540 10,641 14,178 18,006 26,670

SOEs (1) 1,489 1,419 1,640 1,916 2,370 2,888 3,371 4,272 3,907 3,609

Foreign Invested (4) 2,190 2,639 3,194 3,940 4,781 6,522 6,838 9,241 12,503 21,114

Collective (5) 11 26 18 22 44 98 336 502 620 441

Private (6) 0 0 0 3 6 32 96 163 975 1,506

Other 00000000 0 0

Ordinary trade (10) 209 203 263 334 504 787 981 1,176 1,639 2,221

Process & assembling (14) 1,250 1,244 1,409 1,725 2,193 2,487 2,567 2,876 3,292 4,105

Process w/imported materials (15) 2,222 2,620 3,160 3,797 4,466 6,144 6,952 9,969 12,804 19,579

Warehousing trade (33) 9 17 19 21 25 98 84 110 143 188

Entrepot trade by bonded area (34) 0 0 2 4 12 23 57 47 128 578

Other 11000000 0 0

Special Economic Zone 760 859 850 796 883 1,189 1,122 1,107 1,268 1,961

Economic & Technological Development Area 173 236 343 529 779 1,177 1,670 2,915 3,539 5,448

High-Technology Industry Development Area 112 132 148 179 225 452 530 629 1,091 2,543

Bonded Area 18 36 63 68 268 288 375 341 562 1,276

Other 2,629 2,821 3,450 4,310 5,046 6,433 6,944 9,186 11,546 15,442

Furniture, bedding, and lamps (hs-94) 1,074 1,151 1,453 1,904 2,563 3,269 3,383 4,637 5,832 7,636

SOEs (1) 545 469 599 747 970 1,087 1,021 1,289 1,254 1,281

Foreign Invested (4) 491 649 827 1,109 1,523 2,034 2,111 2,919 3,864 5,197

Collective (5) 37 33 26 48 68 131 207 297 307 368

Private (6) 0 0 0 0 2 17 44 132 407 790

Other 10000000 0 0

Ordinary trade (10) 394 352 469 649 805 1,163 1,207 1,851 2,472 3,348

Process & assembling (14) 121 175 235 290 438 487 525 640 558 556

Process w/imported materials (15) 559 621 745 960 1,311 1,606 1,635 2,116 2,746 3,662

Warehousing trade (33) 0 2 2 4 8 13 14 20 28 39

Entrepot trade by bonded area (34) 0 0 1 0 0 0 1 10 28 32

Other 00000000 0 0

Special Economic Zone 74 54 67 85 150 246 243 239 293 319

Economic & Technological Development Area 55 50 50 75 92 158 192 276 366 468

High-Technology Industry Development Area 1 2 2 9 10 12 14 21 70 108

Bonded Area 0 3 5 3 4 5 10 12 29 33

Other 945 1,042 1,327 1,731 2,306 2,848 2,923 4,089 5,075 6,709

Appendix V(a): Decomposing China's Dominant Export Product Drivers to the U.S.

(in millions of U.S. dollars)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Articles of iron or steel (HS-73) 576 702 950 1,291 1,563 2,110 2,252 3,037 4,008 6,165

SOEs (1) 408 411 482 605 696 803 836 945 1,018 1,310

Foreign Invested (4) 79 139 217 316 402 599 632 918 1,262 1,955

Collective (5) 9 13 33 52 60 99 129 156 209 350

Private (6) 0 0 1 2 3 8 24 101 256 596

Other 79 139 217 316 402 599 632 918 1,263 1,955

Ordinary trade (10) 328 366 456 604 729 956 1,047 1,310 1,719 2,896

Process & assembling (14) 41 52 85 107 135 136 136 166 158 175

Process w/imported materials (15) 127 144 190 263 294 414 429 627 832 1,099

Warehousing trade (33) 0 0 0 1 1 3 7 11 19 23

Entrepot trade by bonded area (34) 0 0 0 0 1 1 2 5 17 16

Other 80 139 217 316 402 599 632 918 1,263 1,955

Special Economic Zone 19 25 37 32 41 58 92 148 172 214

Economic & Technological Development Area 25 28 29 34 37 57 55 85 109 186

High-Technology Industry Development Area 1 1 7 1 11 18 7 11 20 49

Bonded Area 1 5 6 9 10 5 11 12 24 23

Other 531 643 871 1,215 1,464 1,971 2,089 2,779 3,668 5,676

Vehicles and related parts, non-rail/tram (HS-87) 836 753 978 1,247 1,544 1,834 1,869 2,724 3,742 5,659

SOEs (1) 215 199 255 303 393 453 442 539 703 824

Foreign Invested (4) 308 269 350 461 555 652 654 997 1,284 1,971

Collective (5) 6 15 22 23 34 65 90 112 197 279

Private (6) 0 0 0 0 6 12 29 78 275 615

Other 615 269 350 461 555 652 654 997 1,284 1,971

Ordinary trade (10) 147 147 191 232 347 475 611 861 1,428 2,284

Process & assembling (14) 60 75 92 90 133 112 81 61 39 29

Process w/imported materials (15) 321 261 342 462 506 589 518 794 972 1,350

Warehousing trade (33) 0 1 2 2 2 5 4 4 9 12

Entrepot trade by bonded area (34) 0 0 0 0 0 1 1 7 10 13

Other 308 269 350 461 555 652 654 997 1,284 1,971

Special Economic Zone 154 96 84 121 113 97 83 106 119 181

Economic & Technological Development Area 50 19 32 55 85 149 175 262 346 462

High-Technology Industry Development Area 0 0 0 0 1 2 5 23 30 87

Bonded Area 0 0 0 1 7 9 7 18 22 51

Other 632 637 861 1,070 1,338 1,578 1,599 2,312 3,206 4,831

Textile art, needlecraft sets; worn text art (HS-63) 392 389 488 596 727 826 830 1,357 2,295 3,076

SOEs (1) 268 229 268 334 416 456 477 607 799 869

Foreign Invested (4) 61 79 108 126 147 170 146 284 521 745

Collective (5) 1 2 4 9 17 27 51 122 206 208

Private (6) 0 0 0 0 0 4 11 61 248 509

Other 61 79 108 126 147 170 146 284 521 745

Ordinary trade (10) 213 180 214 317 415 504 542 898 1,470 1,881

Process & assembling (14) 19 26 27 30 38 40 44 53 67 75

Process w/imported materials (15) 98 102 139 121 127 112 97 120 229 355

Warehousing trade (33) 0 1 0 0 1 1 1 2 7 13

Entrepot trade by bonded area (34) 00000000 2 7

Other 61 79 108 126 147 170 146 284 521 745

Special Economic Zone 50 45 61 46 49 44 43 55 92 113

Economic & Technological Development Area 12 15 32 42 53 74 90 142 236 330

High-Technology Industry Development Area 0 0 0 0 0 1 2 12 16 14

Bonded Area 2 0 0 0 2 1 2 4 5 11

Other 329 329 394 508 623 706 694 1,143 1,945 2,607

Appendix V(a):Decomposing China's Dominant Export Product Drivers to the U.S. (...Continued)

(in millions of U.S. dollars)
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

........................... ...

Nuclear reactors, boilers, machinery & related parts (HS-84) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 35 29 24 24 26 23 21 19 12 12 -24

Foreign Invested (4) 63 68 73 74 72 73 73 76 83 84 22

Collective (5) 232223542 2 0

Private (6) 000000112 3 3

Other 000000000 0 0

Ordinary trade (10) 16 15 12 11 14 15 16 14 10 10 -7

Process & assembling (14) 16 16 12 12 15 12 12 15 16 14 -2

Process w/imported materials (15) 65 67 73 74 70 72 70 68 72 75 10

Warehousing trade (33) 331001000 0 -3

Entrepot trade by bonded area (34) 0 0 2 321121 1 1

Other 000000000 0 0

Special Economic Zone 16 16 21 18 10 11 10 5 4 3 -12

Economic & Technological Development Area 8 7 5 6 6 6 6 10 8 7 -1

High-Technology Industry Development Area 1 1 8 9 10 14 13 17 21 16 15

Bonded Area 0 2 7 8 13 13 8 8 7 6 6

Other 75 74 59 59 61 56 62 60 60 68 -7

Electric machinery, sound & TV equip, & parts (HS-85) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 40 35 34 33 33 30 32 30 22 14 -27

Foreign Invested (4) 59 65 66 67 66 68 64 65 69 79 20

Collective (5) 010011343 2 1

Private (6) 000000115 6 6

Other 000000000 0 0

Ordinary trade (10) 655678989 8 3

Process & assembling (14) 34 30 29 29 30 26 24 20 18 15 -18

Process w/imported materials (15) 60 64 65 65 62 64 65 70 71 73 13

Warehousing trade (33) 000001111 1 0

Entrepot trade by bonded area (34) 0 0 0 000101 2 2

Other 000000000 0 0

Special Economic Zone 21 21 18 14 12 12 11 8 7 7 -13

Economic & Technological Development Area 5 6 7 9 11 12 16 21 20 20 16

High-Technology Industry Development Area 3 3 3 3 3 5 5 4 6 10 7

Bonded Area 011143423 5 4

Other 71 69 71 73 70 67 65 65 64 58 -13

Furniture, bedding, and lamps (hs-94) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 51 41 41 39 38 33 30 28 22 17 -34

Foreign Invested (4) 46 56 57 58 59 62 62 63 66 68 22

Collective (5) 332334665 5 1

Private (6) 0 0 0 0 0 1 1 3 7 10 10

Other 000000000 0 0

Ordinary trade (10) 37 31 32 34 31 36 36 40 42 44 7

Process & assembling (14) 11 15 16 15 17 15 16 14 10 7 -4

Process w/imported materials (15) 52 54 51 50 51 49 48 46 47 48 -4

Warehousing trade (33) 000000000 1 0

Entrepot trade by bonded area (34) 0 0 0 000000 0 0

Other 000000000 0 0

Special Economic Zone 7 5 5 468755 4 -3

Economic & Technological Development Area 5 4 3 445666 6 1

High-Technology Industry Development Area 000000001 1 1

Bonded Area 000000000 0 0

Other 88 91 91 91 90 87 86 88 87 88 0

(in percent of China's HS2 export category to the U.S.)

Appendix V(b): Decomposing China's Dominant Export Product Drivers to the U.S.
Mkt 

 Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004-1995

Articles of iron or steel (HS-73) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 71 59 51 47 45 38 37 31 25 21 -50

Foreign Invested (4) 14 20 23 25 26 28 28 30 31 32 18

Collective (5) 223445655 6 4

Private (6) 0 0 0 0 0 0 1 3 6 10 10

Other 14 20 23 25 26 28 28 30 31 32 18

Ordinary trade (10) 57 52 48 47 47 45 46 43 43 47 -10

Process & assembling (14) 779896654 3 -4

Process w/imported materials (15) 22 21 20 20 19 20 19 21 21 18 -4

Warehousing trade (33) 000000000 0 0

Entrepot trade by bonded area (34) 0 0 0 000000 0 0

Other 14 20 23 25 26 28 28 30 31 32 18

Special Economic Zone 3 4 4 333454 3 0

Economic & Technological Development Area 4 4 3 323233 3 -1

High-Technology Industry Development Area 001011000 1 1

Bonded Area 011110001 0 0

Other 92 92 92 94 94 93 93 91 92 92 0

Vehicles and related parts, non-rail/tram (HS-87) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 26 26 26 24 25 25 24 20 19 15 -11

Foreign Invested (4) 37 36 36 37 36 36 35 37 34 35 -2

Collective (5) 122224545 5 4

Private (6) 0 0 0 0 0 1 2 3 7 11 11

Other 74 36 36 37 36 36 35 37 34 35 -39

Ordinary trade (10) 18 20 20 19 22 26 33 32 38 40 23

Process & assembling (14) 7 10 9 7 9 6 4 2 1 1 -7

Process w/imported materials (15) 38 35 35 37 33 32 28 29 26 24 -15

Warehousing trade (33) 000000000 0 0

Entrepot trade by bonded area (34) 0 0 0 000000 0 0

Other 37 36 36 37 36 36 35 37 34 35 -2

Special Economic Zone 18 13 9 1075443 3 -15

Economic & Technological Development Area 6 3 3 4 6 8 9 10 9 8 2

High-Technology Industry Development Area 000000011 2 1

Bonded Area 000001011 1 1

Other 76 85 88 86 87 86 86 85 86 85 10

Textile art, needlecraft sets; worn text art (HS-63) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 69 59 55 56 57 55 57 45 35 28 -40

Foreign Invested (4) 16 20 22 21 20 21 18 21 23 24 9

Collective (5) 001223699 7 7

Private (6) 0 0 0 0 0 0 1 4 11 17 17

Other 16 20 22 21 20 21 18 21 23 24 9

Ordinary trade (10) 54 46 44 53 57 61 65 66 64 61 7

Process & assembling (14) 576555543 2 -2

Process w/imported materials (15) 25 26 28 20 17 14 12 9 10 12 -13

Warehousing trade (33) 000000000 0 0

Entrepot trade by bonded area (34) 0 0 0 000000 0 0

Other 16 20 22 21 20 21 18 21 23 24 9

Special Economic Zone 13 12 13 875544 4 -9

Economic & Technological Development Area 3 4 7 7 7 9 11 10 10 11 8

High-Technology Industry Development Area 000000011 0 0

Bonded Area 000000000 0 0

Other 84 85 81 85 86 86 84 84 85 85 1

(in percent of China's HS2 export category to the U.S.)

Appendix V(b): Decomposing China's Dominant Export Product Drivers to the U.S. (...Continued)
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004-1995

100 100 100 100 100 100 100 100 100 100

Nuclear reactors, boilers, machinery & parts (HS-84) 7 9 11 12 13 13 14 17 23 24 17

SOEs (1) 3333333333 0

Foreign Invested (4) 5 6 8 9 9 10 10 13 19 20 16

Collective (5) 0000001110 0

Private (6) 0000000011 1

Other 0000000000 0

Ordinary trade (10) 1111222222 1

Process & assembling (14) 1111222343 2

Process w/imported materials (15) 5 6 8 9 9 9 10 12 17 18 13

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 0000000000 0

Special Economic Zone 1122111111 0

Economic & Technological Development Area 1101111222 1

High-Technology Industry Development Area 0011122354 4

Bonded Area 0011221121 1

Other 6 7 6 7 8 7 8 10 14 16 11

Electric machinery, sound & TV equip, & parts (HS-85) 15 15 15 15 17 18 20 20 19 21 6

SOEs (1) 6555666643 -3

Foreign Invested (4) 9 10 10 10 11 13 13 13 14 17 8

Collective (5) 0000001110 0

Private (6) 0000000011 1

Other 0000000000 0

Ordinary trade (10) 1111122222 1

Process & assembling (14) 5545555443 -2

Process w/imported materials (15) 9 10 10 10 11 12 13 14 14 16 7

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 0000000000 0

Special Economic Zone 3332222212 -2

Economic & Technological Development Area 1111223444 4

High-Technology Industry Development Area 0000111112 2

Bonded Area 0000111011 1

Other 11 11 11 11 12 12 13 13 12 12 2

Furniture, bedding, and lamps (hs-94) 4445666766 2

SOEs (1) 2222222211 -1

Foreign Invested (4) 2233444444 2

Collective (5) 0000000000 0

Private (6) 0000000001 1

Other 0000000000 0

Ordinary trade (10) 2112222333 1

Process & assembling (14) 0111111110 0

Process w/imported materials (15) 2223333333 1

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 0000000000 0

Special Economic Zone 0000000000 0

Economic & Technological Development Area 0000000000 0

High-Technology Industry Development Area 0000000000 0

Bonded Area 0000000000 0

Other 4445555655 2

(in percent of China's total exports to the U.S.)

Appendix V(c): Decomposing China's Dominant Export Product Drivers to the U.S.
Mkt 

 Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004-1995

Articles of iron or steel (HS-73) 2223333333 1

SOEs (1) 2212222111 -1

Foreign Invested (4) 0111111112 1

Collective (5) 0000000000 0

Private (6) 0000000000 0

Other 0111111112 1

Ordinary trade (10) 1112222222 1

Process & assembling (14) 0000000000 0

Process w/imported materials (15) 1111111111 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 0111111112 1

Special Economic Zone 0000000000 0

Economic & Technological Development Area 0000000000 0

High-Technology Industry Development Area 0000000000 0

Bonded Area 0000000000 0

Other 2233344445 2

Vehicles and related parts, non-rail/tram (HS-87) 2222222233 1

SOEs (1) 1111111111 0

Foreign Invested (4) 1111111112 0

Collective (5) 0000000000 0

Private (6) 0000000000 0

Other 2111111112 -1

Ordinary trade (10) 1111111122 1

Process & assembling (14) 0000000000 0

Process w/imported materials (15) 1111111111 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 1111111112 0

Special Economic Zone 1000000000 0

Economic & Technological Development Area 0000000000 0

High-Technology Industry Development Area 0000000000 0

Bonded Area 0000000000 0

Other 3233333334 1

Textile art, needlecraft sets; worn text art (HS-63) 1111111222 1

SOEs (1) 1111111111 0

Foreign Invested (4) 0000000011 0

Collective (5) 0000000000 0

Private (6) 0000000000 0

Other 0000000011 0

Ordinary trade (10) 1111111122 1

Process & assembling (14) 0000000000 0

Process w/imported materials (15) 0000000000 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0000000000 0

Other 0000000011 0

Special Economic Zone 0000000000 0

Economic & Technological Development Area 0000000000 0

High-Technology Industry Development Area 0000000000 0

Bonded Area 0000000000 0

Other 1111111222 1

(in percent of China's total exports to the U.S.)

Appendix V(c): Decomposing China's Dominant Export Product Drivers to the U.S. (...Continued)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Total Imports 16,123 16,179 16,301 16,997 19,487 22,364 26,194 27,230 33,860 44,678

Oil seeds, misl grain/seed/fruit/plant (HS-12) 73 294 745 500 559 1,219 1,226 988 2,249 3,392

SOEs (1) 20 104 435 244 260 666 643 288 637 837

Foreign Invested (4) 52 189 309 256 253 451 369 555 1,093 1,589

Collective (5) 1 1 1 1 46 102 136 77 108 327

Private (6) 0 0 0 0 0 0 77 68 411 639

Other 00000000 0 0

Ordinary trade (10) 14 180 528 376 487 1,211 1,193 913 2,188 3,357

Process & assembling (14) 18 21 63 37 14 6 3 3 2 6

Process w/imported materials (15) 39 93 153 86 58 2 30 73 59 29

Warehousing trade (33) 00000000 0 0

Entrepot trade by bonded area (34) 00000000 0 1

Other 10000000 0 0

Special Economic Zone 29 81 64 59 33 61 51 89 90 155

Economic & Technological Development Area 16 59 131 109 115 218 184 210 313 413

High-Technology Industry Development Area 00000001 2 3

Bonded Area 0 0 13 0 0 0 0 38 53 35

Other 28 155 537 332 411 940 990 650 1,790 2,786

Electric machinery, sound & TV equip, & parts (HS-85) 1,904 1,830 2,076 2,892 3,564 4,700 5,962 5,654 5,398 7,627

SOEs (1) 1,086 828 820 1,232 1,387 1,937 2,529 1,804 1,403 1,290

Foreign Invested (4) 745 967 1,200 1,587 2,054 2,605 3,236 3,633 3,670 5,865

Collective (5) 14 20 44 68 94 132 156 91 76 127

Private (6) 0 0 0 1 4 18 35 119 241 335

Other 60 15 12 4 24 8 7 8 8 10

Ordinary trade (10) 1,136 851 840 1,223 1,547 2,371 3,128 2,306 2,396 2,227

Process & assembling (14) 117 120 171 230 404 398 771 442 315 1,567

Process w/imported materials (15) 304 421 648 1,012 1,129 1,150 1,206 2,153 1,907 2,748

Warehousing trade (33) 28 50 60 78 80 98 278 254 163 167

Entrepot trade by bonded area (34) 0 0 27 50 168 459 307 287 366 441

Other 320 388 331 298 236 224 272 212 251 476

Special Economic Zone 267 163 210 204 344 367 505 443 352 422

Economic & Technological Development Area 222 270 398 566 656 969 1,327 1,073 1,307 1,930

High-Technology Industry Development Area 71 115 141 226 168 268 314 518 560 608

Bonded Area 14 32 40 61 359 547 376 445 564 1,570

Other 1,331 1,251 1,288 1,835 2,038 2,548 3,439 3,175 2,614 3,097

Optic, photo, medic or surgical instruments (HS-90) 776 771 776 936 1,216 1,578 2,432 2,123 2,808 3,475

SOEs (1) 541 424 438 527 791 906 1,369 1,234 1,454 1,382

Foreign Invested (4) 208 316 322 365 384 633 876 782 1,110 1,721

Collective (5) 3 8 6 14 23 31 117 42 49 58

Private (6) 0 0 1 0 4 3 65 59 187 312

Other 25 23 9 29 14 5 6 6 8 2

Ordinary trade (10) 555 453 448 558 848 1,029 1,800 1,398 1,821 1,886

Process & assembling (14) 4 3 8 6 7 6 5 5 15 33

Process w/imported materials (15) 27 31 47 46 55 72 93 89 118 247

Equipment/materials investment by foreign-invested enterprise (25) 139 221 205 218 202 335 365 376 474 760

Warehousing trade (33) 22 37 42 55 45 57 44 48 51 84

Entrepot trade by bonded area (34) 0 0 11 14 29 50 84 156 235 334

Other 29 26 15 39 29 29 40 51 95 130

Special Economic Zone 48 58 64 83 119 167 254 139 169 172

Economic & Technological Development Area 48 66 102 140 161 275 367 365 491 766

High-Technology Industry Development Area 30 47 41 63 49 100 209 96 141 181

Bonded Area 10 15 21 25 40 82 119 204 347 530

Other 639 585 547 625 846 954 1,483 1,320 1,660 1,825

Appendix VI(a): Decomposing China's Dominant Import Product Drivers from the U.S.

(in millions of U.S. dollars)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Organic chemicals (HS-29) 431 392 317 334 597 846 748 881 1,511 2,271

SOEs (1) 264 240 192 178 381 529 462 523 714 825

Foreign Invested (4) 150 144 107 142 197 279 227 277 520 837

Collective (5) 5 4 7 12 17 33 41 42 99 194

Private (6) 2 0 1 0 3 4 18 39 176 415

Other 11 4 10 1 0 0 1 0 1 0

Ordinary trade (10) 246 219 165 171 422 675 592 687 1,064 1,529

Process & assembling (14) 15 16 23 18 27 18 16 19 32 55

Process w/imported materials (15) 126 106 79 106 93 72 78 84 152 235

Warehousing trade (33) 42 48 37 29 42 49 34 49 90 152

Entrepot trade by bonded area (34) 0 0 12 9 14 31 28 43 174 300

Other 64 49 15 10 247 504 436 492 617 789

Special Economic Zone 55 35 41 38 54 44 38 56 63 91

Economic & Technological Development Area 64 56 55 64 104 164 152 164 235 333

High-Technology Industry Development Area 1 2 1 2 7 9 20 17 18 39

Bonded Area 11 12 14 9 16 33 29 46 183 315

Other 299 288 206 221 416 596 510 598 1,013 1,492

Misl. chemical products (HS-38) 189 200 250 394 585 495 465 753 1,423 1,117

SOEs (1) 103 102 115 105 175 175 206 197 252 328

Foreign Invested (4) 80 92 122 277 386 299 239 515 1,095 640

Collective (5) 2 4 13 12 22 20 11 11 12 31

Private (6) 0 0 0 0 1 1 8 30 63 119

Other 42111010 1 0

Ordinary trade (10) 91 106 122 118 221 230 276 300 444 605

Process & assembling (14) 16 16 24 113 240 125 32 130 623 230

Process w/imported materials (15) 62 61 77 133 94 101 121 272 293 189

Equipment/materials investment by foreign-invested enterprise (25) 11 8 14 9 7 7 4 5 5 26

Warehousing trade (33) 5 7 3 4 6 13 10 10 15 20

Entrepot trade by bonded area (34) 0 0 7 16 15 18 20 33 40 45

Other 42412122 2 3

Special Economic Zone 19 15 23 27 33 32 41 50 62 95

Economic & Technological Development Area 23 30 38 44 58 80 121 272 309 212

High-Technology Industry Development Area 8 7 6 6 5 10 9 12 27 44

Bonded Area 2 4 9 149 235 132 38 151 665 262

Other 137 145 175 169 254 240 256 268 360 505

Pulp of wood, waste paper, paperboard (HS 47) 271 299 250 236 314 619 614 706 1,043 1,299

SOEs (1) 196 188 119 89 118 225 237 229 307 356

Foreign Invested (4) 72 106 127 146 195 382 349 410 564 737

Collective (5) 2 3 2 1 1 11 26 41 94 87

Private (6) 0 0 0 0 0 1 2 27 78 120

Other 11200000 0 0

Ordinary trade (10) 227 241 207 194 256 545 534 601 837 1,064

Process & assembling (14) 0 1 0 0 0 0 0 0 3 16

Process w/imported materials (15) 43 49 36 39 55 71 79 103 201 201

Warehousing trade (33) 1 7 6 2 3 2 1 2 2 13

Other 00120100 0 5

Special Economic Zone 13 7 6 5 6 5 9 13 24 24

Economic & Technological Development Area 21 21 21 15 20 27 29 45 63 97

High-Technology Industry Development Area 00000001 3 2

Bonded Area 37120100 0 6

Other 234 264 222 214 287 586 576 648 954 1,171

Appendix VI(a): Decomposing China's Dominant Import Product Drivers from the U.S. (...Continued)

(in millions of U.S. dollars)
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-2004

Oil seeds, misl grain/seed/fruit/plant (HS-12) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 27 35 58 49 47 55 52 29 28 25 -2

Foreign Invested (4) 72 64 41 51 45 37 30 56 49 47 -25

Collective (5) 1 0 0 0 8 8 11 8 5 10 9

Private (6) 0 0 0 0 0 0 6 7 18 19 19

Other 0000000000 0

Ordinary trade (10) 20 61 71 75 87 99 97 92 97 99 79

Process & assembling (14) 25 7 9 7 2 0 0 0 0 0 -25

Process w/imported materials (15) 54 32 21 17 10 0 2 7 3 1 -53

Warehousing trade (33) 0 0 0 0 0 0 0 0 0 0 0

Entrepot trade by bonded area (34) 0 0 0 0 0 0 0 0 0 0 0

Other 1000000000 -1

Special Economic Zone 40 27 9 12 6 5 4 9 4 5 -35

Economic & Technological Development Area 22 20 18 22 21 18 15 21 14 12 -10

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 0020000421 1

Other 38 53 72 66 74 77 81 66 80 82 44

Electric machinery, sound & TV equip, & parts (HS-85) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 57 45 40 43 39 41 42 32 26 17 -40

Foreign Invested (4) 39 53 58 55 58 55 54 64 68 77 38

Collective (5) 1122333212 1

Private (6) 0000001244 4

Other 3110100000 -3

Ordinary trade (10) 60 47 40 42 43 50 52 41 44 29 -30

Process & assembling (14) 6 7 8 8 11 8 13 8 6 21 14

Process w/imported materials (15) 16 23 31 35 32 24 20 38 35 36 20

Warehousing trade (33) 1 3 3 3 2 2 5 4 3 2 1

Entrepot trade by bonded area (34) 0 0 1 2 5 10 5 5 7 6 6

Other 17 21 16 10 7 5 5 4 5 6 -11

Special Economic Zone 14 9 10 7 10 8 8 8 7 6 -8

Economic & Technological Development Area 12 15 19 20 18 21 22 19 24 25 14

High-Technology Industry Development Area 4 6 7 8 5 6 5 9 10 8 4

Bonded Area 1 2 2 2 10 12 6 8 10 21 20

Other 70 68 62 63 57 54 58 56 48 41 -29

Optic, photo, medic or surgical instruments (HS-90) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 70 55 57 56 65 57 56 58 52 40 -30

Foreign Invested (4) 27 41 41 39 32 40 36 37 40 50 23

Collective (5) 0112225222 1

Private (6) 0000003379 9

Other 3313100000 -3

Ordinary trade (10) 71 59 58 60 70 65 74 66 65 54 -17

Process & assembling (14) 1011100011 0

Process w/imported materials (15) 3465554447 4

Equipment/materials investment by foreign-invested enterprise (25) 18 29 26 23 17 21 15 18 17 22 4

Warehousing trade (33) 3 5 5 6 4 4 2 2 2 2 0

Entrepot trade by bonded area (34) 0 0 1 2 2 3 3 7 8 10 10

Other 4324222234 0

Special Economic Zone 6 8 8 9 10 11 10 7 6 5 -1

Economic & Technological Development Area 6 9 13 15 13 17 15 17 17 22 16

High-Technology Industry Development Area 4 6 5 7 4 6 9 5 5 5 1

Bonded Area 1 2 3 3 3 5 5 10 12 15 14

Other 82 76 71 67 70 60 61 62 59 53 -30

(in percent of China's HS2 import category to the U.S.)

Appendix VI(b): Decomposing China's Dominant Import Product Drivers from the U.S.
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-2004

Organic chemicals (HS-29) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 61 61 60 53 64 63 62 59 47 36 -25

Foreign Invested (4) 35 37 34 43 33 33 30 31 34 37 2

Collective (5) 1124345579 7

Private (6) 0 0 0 0 1 1 2 4 12 18 18

Other 2130000000 -2

Ordinary trade (10) 57 56 52 51 71 80 79 78 70 67 10

Process & assembling (14) 3475422222 -1

Process w/imported materials (15) 29 27 25 32 16 9 10 9 10 10 -19

Warehousing trade (33) 10 12 12 9 7 6 5 6 6 7 -3

Entrepot trade by bonded area (34) 0 0 4 3 2 4 4 5 12 13 13

Other 15 12 5 3 41 60 58 56 41 35 20

Special Economic Zone 13 9 13 11 9 5 5 6 4 4 -9

Economic & Technological Development Area 15 14 17 19 17 19 20 19 16 15 0

High-Technology Industry Development Area 0 0 0 1 1 1 3 2 1 2 1

Bonded Area 3 3 4 3 3 4 4 5 12 14 11

Other 69 73 65 66 70 70 68 68 67 66 -4

Misl. chemical products (HS-38) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 55 51 46 27 30 35 44 26 18 29 -25

Foreign Invested (4) 43 46 49 70 66 60 51 68 77 57 15

Collective (5) 1253442113 2

Private (6) 0 0 0 0 0 0 2 4 4 11 11

Other 2100000000 -2

Ordinary trade (10) 48 53 49 30 38 47 59 40 31 54 6

Process & assembling (14) 9 8 10 29 41 25 7 17 44 21 12

Process w/imported materials (15) 33 31 31 34 16 20 26 36 21 17 -16

Equipment/materials investment by foreign-invested enterprise (25) 6 4 5 2 1 1 1 1 0 2 -3

Warehousing trade (33) 2 4 1 1 1 3 2 1 1 2 -1

Entrepot trade by bonded area (34) 0 0 3 4 2 4 4 4 3 4 4

Other 2110000000 -2

Special Economic Zone 10 7 9 7 6 7 9 7 4 9 -2

Economic & Technological Development Area 12 15 15 11 10 16 26 36 22 19 7

High-Technology Industry Development Area 4 3 2 1 1 2 2 2 2 4 0

Bonded Area 1 2 3 38 40 27 8 20 47 23 22

Other 72 72 70 43 43 48 55 36 25 45 -27

Pulp of wood, waste paper, paperboard (HS 47) 100 100 100 100 100 100 100 100 100 100 0

SOEs (1) 72 63 48 38 37 36 39 32 29 27 -45

Foreign Invested (4) 27 36 51 62 62 62 57 58 54 57 30

Collective (5) 1111024697 6

Private (6) 0000000479 9

Other 0010000000 0

Ordinary trade (10) 84 81 83 82 81 88 87 85 80 82 -2

Process & assembling (14) 0000000001 1

Process w/imported materials (15) 16 16 14 16 18 11 13 15 19 15 0

Warehousing trade (33) 0 2 2 1 1 0 0 0 0 1 1

Other 0001000000 0

Special Economic Zone 5 2 2 2 2 1 1 2 2 2 -3

Economic & Technological Development Area 8 7 8 6 6 4 5 6 6 7 0

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 1201000000 0

Other 86 88 89 91 92 95 94 92 91 90 4

(in percent of China's HS2 import category to the U.S.)

Appendix VI(b): Decomposing China's Dominant Import Product Drivers from the U.S. (...Continued)
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-2004

Oil seeds, misl grain/seed/fruit/plant (HS-12) 1 3 6 4 4 7 6 6 10 11 10

SOEs (1) 0131132122 2

Foreign Invested (4) 0122121234 3

Collective (5) 0000001001 1

Private (6) 0000000011 1

Other 0122121234 3

Ordinary trade (10) 0132255368 7

Process & assembling (14) 0 0 0 0 0 0 0 0 0 0 0

Process w/imported materials (15) 0 1 1 1 0 0 0 0 0 0 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0 0 0 0 0 0 0 0 0 0 0

Other 0122121234 3

Special Economic Zone 0 0 0 0 0 0 0 0 0 0 0

Economic & Technological Development Area 0 0 1 1 1 1 1 1 1 1 1

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 0000000000 0

Other 0 2 5 3 3 6 5 4 9 10 9

Electric machinery, sound & TV equip, & parts (HS-85) 12 11 13 17 18 21 23 21 16 17 5

SOEs (1) 7 5 5 7 7 9 10 7 4 3 -4

Foreign Invested (4) 5 6 7 9 11 12 12 13 11 13 9

Collective (5) 0000011000 0

Private (6) 0000000011 1

Other 0000000000 0

Ordinary trade (10) 7 5 5 7 8 11 12 8 7 5 -2

Process & assembling (14) 1 1 1 1 2 2 3 2 1 4 3

Process w/imported materials (15) 2 3 4 6 6 5 5 8 6 6 4

Warehousing trade (33) 0000001100 0

Entrepot trade by bonded area (34) 0 0 0 0 1 2 1 1 1 1 1

Other 2222111111 -1

Special Economic Zone 2 1 1 1 2 2 2 2 1 1 -1

Economic & Technological Development Area 1 2 2 3 3 4 5 4 4 4 3

High-Technology Industry Development Area 0 1 1 1 1 1 1 2 2 1 1

Bonded Area 0000221224 3

Other 8 8 8 11 10 11 13 12 8 7 -1

Optic, photo, medic or surgical instruments (HS-90) 5556679888 3

SOEs (1) 3333445543 0

Foreign Invested (4) 1222233334 3

Collective (5) 0000000000 0

Private (6) 0000000011 1

Other 0000000000 0

Ordinary trade (10) 3333457554 1

Process & assembling (14) 0 0 0 0 0 0 0 0 0 0 0

Process w/imported materials (15) 0 0 0 0 0 0 0 0 0 1 0

Equipment/materials investment by foreign-invested enterprise (25) 1 1 1 1 1 1 1 1 1 2 1

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0 0 0 0 0 0 0 1 1 1 1

Other 0000000000 0

Special Economic Zone 0 0 0 0 1 1 1 1 0 0 0

Economic & Technological Development Area 0 0 1 1 1 1 1 1 1 2 1

High-Technology Industry Development Area 0 0 0 0 0 0 1 0 0 0 0

Bonded Area 0000000111 1

Other 4434446554 0

(in percent of China's total imports from the U.S.)

Appendix VI(c): Decomposing China's Dominant Import Product Drivers from the U.S.
Mkt 

Share

Change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-2004

Organic chemicals (HS-29) 3222343345 2

SOEs (1) 2111222222 0

Foreign Invested (4) 1111111122 1

Collective (5) 0000000000 0

Private (6) 0000000011 1

Other 0000000000 0

Ordinary trade (10) 2111232333 2

Process & assembling (14) 0 0 0 0 0 0 0 0 0 0 0

Process w/imported materials (15) 1 1 0 1 0 0 0 0 0 1 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0 0 0 0 0 0 0 0 1 1 1

Other 0000122222 1

Special Economic Zone 0 0 0 0 0 0 0 0 0 0 0

Economic & Technological Development Area 0 0 0 0 1 1 1 1 1 1 0

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 0000000011 1

Other 2211232233 1

Misl. chemical products (HS-38) 1122322343 1

SOEs (1) 1111111111 0

Foreign Invested (4) 0112211231 1

Collective (5) 0000000000 0

Private (6) 0000000000 0

Other 0000000000 0

Ordinary trade (10) 1111111111 1

Process & assembling (14) 0 0 0 1 1 1 0 0 2 1 0

Process w/imported materials (15) 0 0 0 1 0 0 0 1 1 0 0

Equipment/materials investment by foreign-invested enterprise (25) 0 0 0 0 0 0 0 0 0 0 0

Warehousing trade (33) 0000000000 0

Entrepot trade by bonded area (34) 0 0 0 0 0 0 0 0 0 0 0

Other 0000000000 0

Special Economic Zone 0 0 0 0 0 0 0 0 0 0 0

Economic & Technological Development Area 0 0 0 0 0 0 0 1 1 0 0

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 0001110121 1

Other 1111111111 0

Pulp of wood, waste paper, paperboard (HS 47) 2221232333 1

SOEs (1) 1111111111 0

Foreign Invested (4) 0111121222 1

Collective (5) 0000000000 0

Private (6) 0000000000 0

Other 0000000000 0

Ordinary trade (10) 1111122222 1

Process & assembling (14) 0 0 0 0 0 0 0 0 0 0 0

Process w/imported materials (15) 0 0 0 0 0 0 0 0 1 0 0

Warehousing trade (33) 0000000000 0

Other 0000000000 0

Special Economic Zone 0 0 0 0 0 0 0 0 0 0 0

Economic & Technological Development Area 0 0 0 0 0 0 0 0 0 0 0

High-Technology Industry Development Area 0 0 0 0 0 0 0 0 0 0 0

Bonded Area 0000000000 0

Other 1211132233 1

(in percent of China's total imports from the U.S.)

Appendix VI(c): Decomposing China's Dominant Import Product Drivers from the U.S. (...Continued)