Chinese Surpluses and American Deficits: A Change in Global Imbalance

Imbalances between the U.S. and China are in three areas: monetary, trade and economy. Two fundamentally different types of economy are the cause of all other imbalances. International trade and foreign investment (flows of goods and capital) transform these differences in trade surplus for China. In reality, a war of currencies between China and the U.S. would be a superficial conflict that hides deeper structural differences between the two economies. International trade transforms them into a quantitative monetary disequilibrium, which is much easier to observe. Today the situation of the United States requires as many internal changes as for his new competitor: China. However, the real challenge is to find out solutions domestically rather than internationally.