Sometimes it seems this stand-off has been going on for ever. Through economic upturns and downturns, through financial crisis and recovery, the world’s two dominant economies have remained locked in the same dysfunctional yet symbiotic embrace.
China, through huge purchases of dollars to stop its currency rising, is in essence lending the US money to buy Chinese exports. The US complains vociferously, but still either its consumers or its government keeps borrowing.
The US current account deficit did fall somewhat during the crisis, as lower domestic demand in the US stopped sucking in quite so many imports. But as the economic freeze thaws, it becomes clear that the structures underneath remain unchanged, and the Chinese trade surplus has risen again.