Right off the bat I’d like to thank Menzie Chinn of Econbrowser for the following graph of the ratio of the China-U. S. trade balance to China’s GDP. I asked for it in the comments of a post of his on the U. S.-China trade balance and he most graciously produced it for me. Thank you.
As you can see the trend is sharply up: as the Chinese GDP grows, they progressively sell relatively more to us than they buy from us. I don’t think it takes a genius to recognize that this is probably not a sustainable growth strategy for China (nor the U. S.). China needs to buy more from us and cultivate their own internal consumption and there’s plenty that the Chinese would like to buy e.g. food.
But this is where I think that the political liberalization wheel hits the economic liberalization road. I suspect that the Chinese leaders see a more natural trade balance between the United States and China as a potential threat to their own domestic power and will, no doubt, resist it.