China's Bad, No Good Trillion-Dollar Trade Surplus

> But the weak yuan policy is almost certain to backfire, big time, because the rest of the world won’t accept those surpluses for very long.

I find this argument to be weak. Developed economies (US, Canada, Europe primarily) will certainly deploy protectionist policy to attempt to insulate themselves from China's manufacturing machine, but there is enough global addressable market in a variety of industries for China to continue to keep its export operation running well into the future in advanced technologies. Is it a problem that China cannot stoke domestic demand to soak up supply side capacity? Unlikely as long as there are markets that are still developing and will consume these imports.

If developed countries thought they were going to be a powerhouse as gatekeepers to development without actually building at scale, the resulting sadness should've been expected.

(tangentially, I think this is very good assuming substantial effort goes into China exporting EVs, solar, and other low carbon and electrification technologies to the world, because it doesn't appear anyone else has the will)

What looks like weak internal demand (surging exports, stagnant imports) is in fact Chinese industrial policies working incredibly well.

When a Chinese consumer buys a (purely) Chinese-made car or phone instead of a (partly) foreign-made one, it shows up like that in the statistics even though it has nothing to do with weak demand.

China has the explicit policy of subsidizing and otherwise supporting output in high-value-add industries (what they call "new productive forces“), creating a flurry of new companies with competitive offerings in all sorts of sectors — from electric cars to semiconductors and medical equipment.

That was incoherent, right?

He starts out by saying that the trade surplus is bad for china and good for the west, but then goes on to say that China can’t keep it up because inevitably the west will not put up with it.

Econ 101 is almost a decade and a half ago for me, so maybe that’s why I didn’t get the argument that if a nation has a trade surplus, it won’t get foreign investments.

Maybe China now is starting to look like a bad investment, but 10-15 years ago, they still had a huge trade surplus and the west was still falling head over heels to built factories and set up shops there.

What is not explained in the article is how China is "weakening the value of its currency".

The answer to that question may offer a new insight on the situation, and help decide whether it's good/bad and for whom.

As I understand, weakening one's currency (in real terms) is not an easy thing to do. As an example, in the case of the Greece economic crysis mentioned in the article, Germany was considered as having benefited from the common currency (Euro, shared among others with Greece) to maintain a stable currency while sustaining a high positive trade balance.

What I suspect is happening is that China is buying US treasury bonds (exchanging Yuan for USD in the process), thus supporting the value of the USD.

Sour grapes, Paul.

I didn't see the US's huge trade surpluses from 1940 to 1980 being a huge problem. Especially when one out of every two motor vehicles was being built in the US.