Commentaries » Blog Archive » Imagine when China runs a trade deficit | Blogs |
If current trends continue, China might swing to a trade deficitin the not-too-distant future. Given that China has enjoyed morethan a decade of strong exports, this may sound a bit far-fetched.But even if it happens, this would not necessarily be something forthe world to worry about. Some economists have recently sounded alarm bells about thepossibility of a Chinese trade deficit. They argue that if theChinese current account surplus shrinks, it would leave Beijingwith less spare cash to buy U.S. Treasury bonds. Then who wouldfund the U.S. budget deficit — and, by implication, U.S.consumers?