Chinas trade surplus with the United States recorded the highest level ever last year, followed by hard-line trade actions. While the ongoing trade disputes focus on the U.S.-China trade balance, we have to note that the gross trade balance can be misleading when considering that China is deeply integrated in the international fragmentation of production.The domestic value added contents of Chinese exports to the United States only accounted for 65.3% as of 2011. The ratio shrinks for high-technology products. This implies that tariffs levied on Chinese high-technology items will affect other countries on the supply chain rather than China.