When President Hu Jintao sits down with US President George W Bush today, the gigantic, still-growing US trade deficit with China will be Bush's top priority. Everyone expects Hu to be on the defensive. After all, the gap between what the United States sells and buys from China mounted to more than US$200 billion (HK$1.56 trillion) last year.

That is bigger than Hong Kong's entire gross domestic product, which ranked 31st out of nearly 200 economic entities worldwide.

More impressively, the trade gap was as big as 27th ranked Indonesia's entire economy, setting the all-time record for trade deficits among countries. It was by far the biggest for any US trading partner, ever.

This year the US-China deficit will top last year's.

Even the Attention Deficit Disorder- challenged American public have started paying attention. And so have their politicians. So what? you might ask. Why should I care what Hu and Bush discuss?

If something bad happens to Sino- US relations, be it a trade or a Taiwan war, Hong Kong, the center of the China-US trade, will reel from the impact. Indeed, a war in the strait would probably damage Hong Kong and Asia less than a trade war.

A trade war looks much more likely.

Now that the American public and politicians have gotten interested, the problem is rhetoric trumps rationality. Politicians' self-interest in getting elected damages intelligent decision-making, and the November US elections are turning particularly nasty and unexpectedly competitive. Before campaigning even starts in earnest, congressmen have made economically crazy proposals such as restrictions on foreign investment or purchase of US debt.

True, such proposals would solve that trade deficit instantly. The value of the US dollar would collapse and Americans would not be able to afford China's goods, or anyone else's.

Incidentally, since the Hong Kong dollar is pegged to the US dollar, our currency and economy would follow America's right into the hole. Even changing the peg helps little if the enormous US-China trade flow dries up. Much of our currency reserves and surplus would vanish along with the US dollar's value.

Now do I have your attention?

Most people only regard highlight statistics of the trade issue. They ignore the larger picture, but the big picture transforms the debate.

Here it is.

The US-China deficit pales against the overall US trade deficit of US$726.3 billion last year. China's trade gap comprises only 27.8 percent of America's trade deficit problem.

Proportionately, since 1997 America's trade deficit with South Korea has gone up more than seven times while China's rose just over four times. The issue is clearly not only "unfair" US-China trade.

Further, like the United States, Japan and Taiwan have been rapidly moving manufacturing to the mainland.

If one examines US trade with Japan, South Korea, the mainland, Taiwan, Hong Kong and Macau - what I will call the East Asia bloc for short - things look very different.

You have to do a little math to figure this out. Maybe that is why math-phobic Americans fail to see it.

Percentages of total trade, not amount changes per year, tell the true tale of trade traumas.

Based on US International Trade Administration figures posted at http:/ /hongkong.usconsulate.gov/usinfo/ statis, the East Asia bloc was the source of 28.7 percent of all US imports in 1998. In 2004, it made up 28.4 percent.

US imports from East Asia proportionately to all its imports have actually fallen.

US exports to this bloc were 17.5 percent of all its exports in 1998 and made up 18.7 percent in 2004. Yes, that is a rise, meaning the trade gap between the United States and the East Asia bloc has narrowed.

In fact, the East Asia bloc was the source of 66.6 percent of the US global trade deficit in 1997. In 2003, the latest year figures from all countries are available, this bloc contributed 40.2 percent of America's entire trade deficit, a considerable drop in proportional terms.

Separating China from its regional developmental context distorts the real picture, which is that East Asian manufacturing has moved to the mainland.

America has a growing trade deficit problem, but not with East Asia as a whole. There the gap is shrinking.

Attacking China to solve America's trading gap is like attacking Iraq in the belief it might have nuclear weapons programs while ignoring Iran and North Korea actually making the stuff.