When the world is wondering where the trade war waged by the U.S. against China is heading to, let us pause and take a look at the underlying arguments of the U.S. to see whether they are justified.
The main criticism that the U.S. makes against China centers around the trade deficit America runs with China. Deficits are not products of ill-intention, nor are they necessarily bad for an economy. Generally, they result from how resources are allocated in a globalized economy and are natural reflections of the global value chain. Besides, some structural reasons, such as the low savings and high consumption rates America maintains, the role of the U.S. dollar as the international reserve currency inevitably leads to trade deficits. The fact that the U.S. government curbs high-tech exports to China makes the deficit even bigger.
China has never deliberately sought a trade surplus as the flow of trade is determined by the market. Having a deficit does not mean the U.S. is "losing." On the contrary, thanks to the trade with China, American families have access to more, higher quality, lower cost products. In just 2015, trade with China lowered prices in the U.S. by up to 1.5 percent, saving each family $850 on average.
China's structural problems of its economy are also a source of American criticism. However, this is neither fair nor objective.
