If this makes you feel better, Chinese are buying stuffs from many
other Asian countries (most of them are US allies), assembling those
stuffs together and selling the finished products to US. In a way, the
large trade deficit with China is simply a repackaging of the large
trade deficit that US used to have with other Asian countries. Now the
trade deficit takes a detour to China and get re-labeled as a trade
deficit with China.
China has very little natural resource other than human resource. If
China needs to sell something, China needs to import it from foreign
countries in a form of raw materials or partially finished components.
That is the reason China has trade deficits with the rest of the Asian
countries (particularly Japan). In the end, China has a small surplus;
this is not like China is rolling in money. Please bear in mind that
China sells a lot of stuff to US, but US also sells a lot of stuffs
(like military equipments) to Asian countries, and those Asian
countries sells a lot of stuffs to China. This is like a loop.
Therefore, we cannot simply look at the trade balance with China in
isolation. We need to look at the big picture.
If US wants to improve its overall trade balance, US needs to sell
more stuff to the rest of the world. US has plenty of raw materials
that can sell -- start by opening more oil fields in Alaska. This is a
question of whether US (government and people) has the will to do
The other way is to cut the defense budget or downsize the government,
and channel the money (in the form of tax saving) to private sectors
in order to increase the capital investment on US industrials. This is
to improve the productivity of US industrials. Honestly, I don't know
if this will work though (US companies could send the money aboard and
opened a state of the art factory in China); therefore, I don't say
anything more on this.
There are other things that US can do well and could have sold well.
High tech military equipments are things that US is doing very well
and could have sold well. Afterall, US has spent so much money
developing those weapons. But for one reason or another, US cannot
simply sell these high tech stuffs to any country discriminably. This
means US has very great stuffs that US could have sold but cannot
In other words, there are many great stuffs that US could have sold,
but cannot sell for some reasons. This will go a long way explaining
why US has a large trade deficit.
If US doesn't want to sell more stuffs to the world, US will need to
find a way to buy fewer stuffs from the rest of the world either
voluntarily or being forced on. Seem like if the budget deficit keeps
increasing like this, US currency may drop its value. IF this
happened, we would not afford to buy that many stuffs from the rest of
the world, and the trade deficit would be taken care of in this way.