For about the past half century the US has maintained a trade deficit. On the other hand, China has developed a trade surplus mostly because of the lopsided trade situation between the two countries. China makes a wide range of cheap goods and most of them are bought in the US.
During the financial crisis, and its aftermath, these imbalances seemed to rein in a bit and trade between the two countries looked like it could at least be headed back in the direction of a healthy alignment. However, it was a temporary and misleading close in the gap. The imbalance reduced only because global trade overall was shrinking… including the distortions… not because there was any real improvement in the US-China trade situation.
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It’s the EU’s Crisis now, but the US Could be Next
The financial crisis that began in housing, and then with banks and insurers, has now moved onto the balance sheets of nations. And, among the fiscally unsound, it’s the euro that is suffering the most. It recently hit a 14-month low in dollar terms, and the ongoing uncertainty facing the EU continues to break records for pessimism.
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