Today, the United States needs Chinese capital, while China needs US technology and know-how. Taking the US-Chinese trade to a new level is in the interest of both nations.

Since the early 2000s, the US trade deficit with China has caused increasing debates in the US. Last year, American exports to China reached $70 billion, while Chinese exports to the US were $300 billion.

But the deficit is a regional story. It has been typical to US trade with East Asia for decades - first with Japan, then with the Four Asian Tigers (Singapore, South Korea, and Hong Kong and Taiwan), and now with China. The product label may say "Made in China", but the simple reality is that about 50-60 percent of "Chinese exports" is actually trade by foreign multinationals operating in China.

Paradoxically, even high-tech products invented by US companies do not increase US exports. They exacerbate the US trade deficit. For instance, Apple's popular iPhone alone contributes $1.9 billion to the US trade deficit with China.

The implications are equally paradoxical. As China's trade partners seek to erect barriers against "Chinese trade", they are actually hampering the activities of multinationals headquartered in their own capitals.

The US deficit in merchandise trade with China is counter-balanced by its surplus in service trade. Before the global financial crisis, the US service exports to China amounted to $14 billion, while Chinese service exports to the US were $9 billion, that is, the US enjoyed a surplus of $5.4 billion.

Since the dollar value of service trade is significantly lower than that of merchandise trade, such figures are often ignored. Yet the service providers comprise leading US banks, financial institutions, law firms, insurance companies, travel agencies, management consultants, IT services, transportation companies, and medical and health services. From the US standpoint, service trade with China translates into high-income jobs and profits from investments in China, which, in turn, support investment and jobs in the US.

Conversely, China needs cutting-edge service capabilities as it seeks to move toward and increase productivity in high-value industries.