To do so, the US will need a trade surplus.

With the global economy recovering, China s trade surplus began to grow.

As a result, the total eurozone trade surplus is now massive.

But the flip side of the trade surplus is the capital outflow.

That country has a trade surplus. It exports more than it imports.

So its trade surplus continues to soar at the expense of other countries.

In ancient times, India ran a large trade surplus with the Roman empire.

Japan is a country with a structural trade surplus ie, exports are likely to remain above imports on a sustained basis because Japan s trade surplus results from an excess of national saving over investment.

This makes the renminbi chronically undervalued and assures China of a persistent large trade surplus.

China s trade surplus peaked at 300 billion in 2008, and has been declining ever since.

For starters, given the eurozone s huge trade surplus, doing so would incur strong international resistance.

In fact, China's overall trade surplus today is actually small, around 1 of its GDP.

Japan's bilateral trade surplus is nearly the same size as its savings in the US.

Germany , Europe s largest exporter, has a very large trade surplus with the rest of the world.

China s pursuit of a high saving, large trade surplus economy in recent years embodies mercantilist teachings.

China's trade surplus with the US exceeds 100 billion, but it runs a deficit with India.

So China continues to run a giant trade surplus, and the US continues to spend and borrow.

Moreover, the Bush and Clinton Administrations warned that Japan should not export its way out of trouble, as if a trade surplus resulting from export growth was somehow unfair. Japan is a country with a structural trade surplus ie, exports are likely to remain above imports on a sustained basis because Japan s trade surplus results from an excess of national saving over investment.

In short, substantial RMB appreciation would reduce the bilateral US China trade deficit and China s overall trade surplus significantly, but it would do little to reduce the overall US trade deficit.

With China s US trade surplus reaching 200 billion last year, American sentiment is growing to take strong measures.

By 2000, China s bilateral trade surplus was as large as Japan s by 2004, it was twice as large.

The northern countries argue that permitting wage growth and boosting domestic demand would reduce their competitiveness and trade surplus.

So far in 2009, China s surplus has accounted for 75 of the total US non oil goods trade deficit.

Indeed, if foreign owned enterprises exports are deducted from the total trade volume, the surplus vanishes, because both the overall balance of merchandise trade and the balance of trade in services normally run deficits.

China s purchases of American debt effectively transferred the official reserves gained via China s trade surplus back to the US market.

China has yet to discover and adopt an alternative growth strategy that does not rely on a large trade surplus.

And an unwillingness to trade away export led growth is having the same effect on the East s surplus countries (especially China).

When demands for China to adjust its exchange rate began during George W. Bush s administration, its multilateral trade surplus was small.

The US has complained about China s current account (trade) surpluses but, as a percentage of GDP, Germany s surplus is even greater.

China represents a massive challenge even for countries, such as Brazil, that have achieved a significant trade surplus up to now.

And lagging household income clearly contributes to China s trade surplus, because low domestic consumption tends to keep exports higher than imports.

And Germany recorded a trade surplus of 175 billion in the 12 months through August, whereas Spain has run a trade deficit of 84 billion in the past 12 months.

Now it has a surplus.

So China can have a trade deficit with the Middle East and a trade surplus with the US, but these bilateral balances indicate nothing about China s overall contribution to global imbalances.

Over the past several years, much attention has focused on the role of China s trade surplus in creating today s global financial imbalances.

This invariably means that fiscal and monetary stability will become a priority while controlling the trade surplus has become a lower one.

But the euro area as a whole nonetheless had a trade surplus of more than 30 billion over the past 12 months.

Higher foreign demand from today s trade surplus countries (China, Germany, and Japan, among others) could help restore some of the missing demand.

Somewhat faster demand growth in Germany and a lower external surplus would help not only Germany s trade partners, but also German savers.

Japan's bilateral trade surplus is nearly the same size as its savings in the US. As long as America borrows Japanese savings to fuel its domestic investment, a trade deficit is inevitable.

In recent years, China also got hooked on a large trade surplus vis à vis the US the counterpart of its undervalued currency.

In recent years, China also got hooked on a large trade surplus vis à vis the US  the counterpart of its undervalued currency.

Moreover, the World Trade Organization s agenda will remain irrelevant and, in any case, deadlocked. China has yet to discover and adopt an alternative growth strategy that does not rely on a large trade surplus.

During the same period, annualized US imports declined by 284 billion more than US exports, and China s annualized trade surplus increased by 249 billion.

But if exports continue to grow in the absence of consumption led import growth, distortions occur and the trade surplus and foreign reserves increase.