Trump has the chance of wiping out the U.S. trade deficit with China

Trump has the chance of wiping out the U.S. trade deficit with China, by Ivan Martchev.

I have often said in this column that there will be a trade deal based on the realization that the domestic economic situation in China is very precarious and the lack of a trade deal will make matters a lot worse for the Chinese economy. Multiple media outlets reported that the Chinese made an offer in mid-January to go on a bigger-than-$1-trillion-dollar buying spree in a bid to eliminate the trade deficit by 2024 …

I believe that the U.S. trade deficit with China can be eliminated completely, as the Chinese have been employing a very clever trade policy ā€” to the detriment of the United States. Since China is a hybrid economy, Chinese state buyers control where China buys from.

The Chinese have been running trade deficits themselves (i.e., trade surplus for the partner country) with many countries they consider key partners, so that they can increase their political influence.

If China is the No. 1 trading partner for South Korea, for example, Chinese influence in South Korea can increase while U.S. influence decreases, despite the sizeable U.S. military presence there. There are numerous other examples where China is the No. 1 trading partner and the Chinese buy more on purpose ā€” so that they can be more influential politically.

Such as Australia.