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The vanishing illusion of China's financial might

China's current-account surplus is shrinking amid a growing dollar shortage

China's current-account surplus is expected to fall into deficit in the coming years as its services trade deficit grows. (Photo by Akira Kodaka)

TOKYO -- Frustrated by what he has described as China's backtracking on key trade commitments, U.S. President Donald Trump has taken his trade fight with Beijing to the next level. He has raised U.S. tariffs on $200 billion in Chinese exports to 25% from 10% and directed the U.S. Trade Representative to prepare more tariff hikes on Chinese products.

The source of Trump’s ire is China’s huge trade surplus with the U.S. In 2018, China exported $539.5 billion worth of goods to the U.S., 4.5 times more than the U.S.’s $120.3 billion worth of shipments to China. That leaves the U.S. with a staggering $419.2 billion trade deficit with China.

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