| Abstract | Based on the accounting of the trade in value added, this paper uses the Trade in Value Added Database (TiVA), which is developed jointly by OECD and WTO, to measure the Rate of Domestic Value Added of Gross Exports (RDVAE) in China from 1995-2009, and analyze the China’s bilateral trade imbalance from the perspective of gross trade and trade in value added, respectively. Our results show that :(1) China’s RDVAE has a V-type evolution trend, which means the RDVAE declines rapidly at the beginning, but increases slowly then. (2) The comparisons of the gross trade surplus and the value-added trade surplus in final demand show that the trade surplus, the trade deficit and the bilateral trade imbalance in China are all exaggerated significantly according to the traditional gross trade measures. (3) According to the traditional gross trade measures, the trade surplus in Chinese manufacturing industries is exaggerated by almost 40%.The trade surplus in Chinese labor-intensive and technology-intensive industries is exaggerated by around 50% and 60% up, respectively. (4)The bilateral trade imbalance between China and China’s main export markets and main import markets is also exaggerated. For example, the trade surplus between China and main developed countries is exaggerated by around 30%, and the trade deficit between China and Asian emerging economies is exaggerated by almost 80%. Our study provides the theoretical and factual evidences for China dealing with the increasing trade protectionism and anti-dumping to China. |