Why Should the Recorded U.S.­Chinese Bilateral Trade

Multiple Choice

Why should the recorded U.S.­Chinese bilateral trade
Deficit in goods be interpreted with some caution?

A) U.S.imports of Chinese products may be produced by U.S.subsidiaries that generate profits for the U.S.parent
Firms (recorded as U.S.service export income) .
B) U.S.imports of Chinese products may utilize material inputs that China imports from the United States.
C) U.S.imports of Chinese products may be produced with capital goods (e.g., machinery) that China imports from
The United States.
D) All of these are reasons for a cautious interpretation of the U.S.­Chinese bilateral trade balance.