Economics

Aug 10, 2026 Dani Rodrik

When major economies are running at near full capacity, it is not clear that trade deficits should be a cause for concern, since they represent a transfer of purchasing power from surplus countries. Under the current circumstances, then, China’s widely criticized surpluses might as well be called enrich-thy-neighbor.

CAMBRIDGE—As China continues to capture global markets in manufactures and its trade surpluses grow, it is increasingly viewed elsewhere as a country whose economic growth comes at the expense of the rest of the world. China’s industrial policies and growth model at large, the critics complain, are beggar-thy-neighbor.