As an immature creditor lender, the trade balance and current account are in surplus as well as a mature creditor lender, the trade balance returns to deficit finally, as a creditor borrower, the country s current account swings into deficit.

CAMBRIDGE China s trade balance is on course for another bumper surplus this year. Meanwhile, concern about the health of the US recovery continues to mount.

The trade balance with Argentina, Colombia, and Asia is negative.

Such a tax would not have prevented the US China trade imbalance.

Oil accounts for 40 of exports and contributes to maintaining a positive trade balance.

In fact, the trade imbalance is more complicated than the currency issue per se.

Unless the US economy improves its trade balance, the dollar will fall.

In addition to the trade and budget deficits, there is a jobs deficit.

Indeed, Mexico s trade deficit with China reached 9 billion in 2003.

Perhaps most important, a weaker dollar s effect on the trade balance, and thus on growth, is limited by two factors.

This large, steady fall in the country s trade surplus makes the Chinese government hesitant to allow the RMB to appreciate significantly, for fear of the lagged impact on the trade balance.

Empirical studies estimate that the overall impact of a weaker US dollar on the trade balance is close to zero.

Doing so will raise the cost of imports and lower the cost of exports, leading to an improvement in its trade balance.

Until recently, the region maintained a trade surplus with the US, but with liberalization, the region will increase imports of more affordable goods, thereby turning the surplus into a deficit.

Only when a country invests less in fixed assets than the amount that it saves will the surplus savings show up in the trade balance.

To judge whether their prices are too high at the existing exchange rate we have to look at the trade balance.

Many factors other than exchange rates affect a country s trade balance. A key determinant is national savings.

Interestingly, both sides cite America s gaping trade deficit believe it or not, the US is soaking up two thirds of global excess saving to support their arguments.

To restore growth, these countries must also regain competitiveness by achieving a real depreciation of their currency, thus turning trade deficits into surpluses.

In sum, the fact that the US trade balance has defied gravity for so many years has made it possible for the dollar to do so, too.

Consider Mexico's trade balance with the US since the North American Free Trade Agreement (NAFTA) came into effect. In the years between 1995 and 2002, Mexico's annual trade deficit with the US increased to 1 billion.

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Savings could remain high, even as current consumption grows slowly, while the trade balance would be held in check by higher demand for imported capital goods.

White Balance

White balance

The true risk lies in the possibility that the renminbi is significantly undervalued and that appreciation would have a major impact on China s trade balance.

First, a weaker dollar is associated with a higher dollar price for commodities, which implies a drag on the trade balance, because the US is a net commodity importing country.

Indeed, some Chinese authorities also maintain that renminbi appreciation would have no significant impact on China s trade balance because they believe that China s trade surplus is a reflection of excess saving and hence has nothing to do with the exchange rate.

The experience of 1914 implies that a credible alternative can replace an entrenched world currency, especially after an unfavorable balance of trade has weakened it.

Asia in the Balance

So the key determinant of the dollar s long term value is that it must decline enough to shift the US trade balance from today s deficit to a surplus.

The current account deficit is increasing relentlessly, owing to a widening trade deficit (now at 13 of GDP), raising the danger of a balance of payments crisis.

America depends on China s trade surplus and savings to finance its outsize budget deficits, while China relies on its huge exports to the US to sustain its economic growth and finance its military modernization.

But the euro area as a whole nonetheless had a trade surplus of more than 30 billion over the past 12 months. And, with the euro down significantly relative to many other currencies over the past year, Europe s trade balance can increase further in the months ahead.

The small excess of quarks over antiquarks led to a small excess of baryons over antibaryons.

By relenting just a little to intense global pressure to revalue its exchange rate, the Chinese leadership has masterfully stifled the growing chorus of demands to rein in its growing trade surplus.

Weigh on an even balance .

And weigh with a proper balance .

and weigh with the straight balance ,

And weigh with a balance straight .

And weigh with the true and straight balance .

And weigh with accurate scales .

weigh with an even balance

And weigh with the true balance .

Weigh with an even balance ,