US-China trade: Beijing should rethink its trade surplus

Current account surplus countries such as China, Japan and South Korea are getting richer by accumulating net foreign assets, including the huge and well remunerated claims on the United States. By contrast, America is getting poorer with $8 trillion, and counting, of net foreign liabilities.

How can anyone blame the White House for trying to put an immediate end to that decades-old mismanagement of the U.S. economy?

Perhaps China should give a thought to that.

Another consideration is that China’s huge domestic and foreign investments come, in large part, from the money it earns on its export sales to America. In other words, China is recycling its U.S. trade surpluses in the form of soaring investments around the world.

Is that President Xi Jinping’s “win-win cooperation” that should serve as a founding principle of China’s “community with a shared future for mankind” that he talked about at the BRICS Business Forum in Johannesburg, South Africa, last week?

I doubt that he can sell that even to his good friend President Vladimir Putin of Russia.

The two men had a full-court bilateral summit with their top advisors last Thursday on the sidelines of the BRICS meeting, before sharing a private dinner. Russians, too, are concerned about the balance of their bilateral trade with China that could approximate $100 billion by the end of this year.

That, of course, pales in significance to a U.S.-China $636 billion goods trade last year, where $505.6 billion represented Chinese exports to America.

So, what now? A rational government should call for China to balance its trade accounts with the U.S.

Beijing would probably do well to promptly initiate that process on its own because the current situation cannot continue and there is nothing to gain by dragging things out.

Washington, for its part, should treat China, and its leaders, with respect.

China, like any other country, can be called out — within the appropriate WTO committees — for suspected trade violations, but the White House cannot keep blaming China for decades-long wealth and technology transfers at the U.S. expense. The blame is with previous administrations that unforgivably mismanaged trade relations with China.