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Purpose It is a common view to Trump administration and public that devaluation of Chinese currency is the origin of the US trade deficit. However, the previous literature does not support this common view. To better understand the causes of the US trade imbalances with China, this study aims to review the previous literature focusing on the causes of bilateral trade imbalances between the USA and China. Design/methodology/approach Review previous literature according to the different reasons that each paper studies. Findings Based on the previous literature, the Chinese exchange rate is not the main reason for the US trade imbalances. The official US trade figures overestimate the amount of deficit. The actual causes for the US trade deficit with China perhaps should be the relocation of production to China, low saving in the USA and high saving in China, and the US dollar as the international currency and reserve. Originality/value By reviewing previous literature, the authors could better understand the puzzle of the US trade deficit with China.

The massive deficit in the U.S. trade and current accounts is one of the most striking features of the current global economy and, to some observers, one of the most worrying. Although the current account deficit finally began to shrink in 2007, it remained at more than 5 percent of GDP—more than $700 billion. While some observers claim that the U.S. economy can continue to have trade deficits of this magnitude for years—some would say for decades—into the future, I believe that such enormous deficits cannot continue and will decline significantly in the coming years. This paper discusses the reasons for that decline and the changes that are needed in the U.S. saving rate and in the value of the dollar to bring it about. Reducing the U.S. current account deficit does not require action by the U.S. government or by the governments of America's trading partners. Market forces alone will cause the U.S. trade deficit to decline further. In practice, however, changes in government policies at home and abroad may lead to faster reductions in the U.S. trade deficit. More important, the response of the U.S. and foreign governments and central banks will determine the way in which the global economy as a whole adjusts to the decline in the U.S. trade deficit. Reductions in the U.S. current account deficit will of course imply lower aggregate trade surpluses in the rest of the world. Taken by itself, a reduction in any country's trade surplus will reduce aggregate demand and therefore employment in that country. I will therefore look at what other countries—China, Japan, and European countries—can do to avoid the adverse consequences of the inevitable decline of the U.S. trade deficit.

The current account deficit of the United States has been large in recent years, both in absolute size and relative to GDP. In 2006, it reached $811 billion, 6.1 percent of GDP. It has become a dominant feature of the world economy; if you sum up the current account deficits of all nations that are running deficits in the world economy, the U.S. deficit accounts for about 70 percent of the total. This paper looks beyond the national income accounting relationships to offer a more complex view of the U.S. imbalance. I argue that the generally rising U.S. trade deficit over the last 10–15 years is a natural outcome of two important forces in the world economy—globalization of financial markets and demographic change—and therefore that the U.S. current account deficit is likely to remain large for at least a decade. In a globalized market, the United States has a comparative advantage in producing marketable securities and in exchanging low-risk debt for higher-risk equity. It is not surprising that savers around the world want to put a growing portion of their savings into the U.S. economy. I argue that serious efforts to reduce the U.S. deficit, even collaborative efforts with other countries, may well precipitate a financial crisis and an economic downturn every bit as severe as the one that many fear could result from a disorderly market adjustment to the trade deficit.

Bernanke (2005) hypothesised that a 'global savings glut' was causing large trade imbalances. However, we show that the global savings rates did not show a robust upward trend during the relevant period. Moreover, if there had been a global savings glut there should have been a large investment boom in the countries that imported capital. Instead, those countries experienced consumption booms. National asset bubbles explain the international imbalances. The bubbles raised consumption, resulting in large trade deficits. In a sample of 18 OECD countries plus China, movements in home prices alone explain half of the variation in trade deficits.

How did Cuba's long-established sugar trade result in the development of an agriculture that benefited consumers abroad at the dire expense of Cubans at home? In this history of Cuba, Louis A. Perez proposes a new Cuban counterpoint: rice, a staple central to the island's cuisine, and sugar, which dominated an export economy 150 years in the making. In the dynamic between the two, dependency on food imports-a signal feature of the Cuban economy-was set in place.Cuban efforts to diversify the economy through expanded rice production were met with keen resistance by U.S. rice producers, who were as reliant on the Cuban market as sugar growers were on the U.S. market. U.S. growers prepared to retaliate by cutting the sugar quota in a struggle to control Cuban rice markets. Perez's chronicle culminates in the 1950s, a period of deepening revolutionary tensions on the island, as U.S. rice producers and their allies in Congress clashed with Cuban producers supported by the government of Fulgencio Batista. U.S. interests prevailed-a success, Perez argues, that contributed to undermining Batista's capacity to govern. Cuba's inability to develop self-sufficiency in rice production persists long after the triumph of the Cuban revolution. Cuba continues to import rice, but, in the face of the U.S. embargo, mainly from Asia. U.S. rice growers wait impatiently to recover the Cuban market.

This essay considers the underpinnings of the large U.S. current account deficit. It then tackles the question of whether the U.S. current account deficit is sustainable. A current account deficit is “sustainable” at a point in time if neither it, nor the associated foreign capital inflows, nor the negative net international investment position are large enough to induce significant changes in economic variables, such as consumption or investment or interest rates or exchange rates. Even if the current account deficit is sustainable by this definition today, its trajectory could still be creating future risks for the U.S. and global economy.

As economic development advances, a country's service sector grows. With globalization, this growth is often accompanied by the growth of trade in services. China is a good example. After three decades of spectacular economic advance, its service trade is now one of the world's largest, but so is its service trade deficit. How did this come about, given China's competitive strength in the export of goods? Second, is this deficit a statistical anomaly, i.e. with China participating in global supply chains, how well do gross exports reflect the true value of China's service exports? Third, what is the real competitiveness of China's service exports? This study examines these questions by first reviewing the structure and trends in China's service trade using official statistics. It then re-estimates these exports using the \"forward linkage value-added method\" to compare with gross exports. The third question is addressed by calculating revealed comparative advantage (RCA) indexes based on gross as well as value-added service exports. Using 2000-2014 data, the results show that no matter which method is applied, China's service exports have weak comparative advantage but rising RCAs show China's competitive situation improving. Also, gross export values overestimate the RCA compared to value-added values. A number of policy implications arise from these findings.

This article provides an analysis of Turkish trade deficits from the perspective of technology, with particular focus on the period that began with the new millennium. It draws special attention to the technological structure of Turkish exports vis-à-vis Turkey’s major trade partners and illustrates how Turkish trade deficits are primarily structural in nature and essentially caused by weak technology as compared with Turkey’s partners. Turkish products lack competitiveness, particularly in the case of relatively higher technology goods. The future prospects for Turkey are discussed in relation to the present level of the country’s technology infrastructure, and it is emphasized that, if Turkey is to achieve a better trade balance and a prominent share of world exports in the future, merely increasing its business sector’s weak R&D expenditures will not be sufficient, as the country needs also to provide a sufficient number of researchers in order to increase its technological capacity. Moreover, in the case of both R&D expenditures and researchers, quality as well as quantity is required, with the number and quality of the latter in particular being crucial both for innovating and for absorbing foreign technology.