The answer is simple: bring in a new set of bean-counters (sometimes
from a different country). This is essentially what the MOFCOM of China and DOC
of US did in their new “Report on the Statistical Discrepancy of Merchandise
Trade Between the United States and
China
”, which was issued on March 4th (English version here; Chinese version here). After accounting for the differences created by transshipment through HK and
other intermediaries, mark-ups, and customs valuation, the discrepancy in the
statistics have shrunken from a whopping 84.3 billion USD to a (still large but
not so extreme) 24.2 billion USD.
While this report adds nothing new to the intellectual
debate as it has largely confirmed the works by KC Fung and Larry Lau (see this
and this) on the topic, this is probably the first time that the US government
openly admits that part of the growing deficit with China might simply be statistical
rather than substantive.
Now the question is: Does this mean that the US government will soften its stand
on the currency issue?