China reported a record trade surplus with the rest of the world for the month of June–$14.5 billion. Some economists warn that China’s growing trade dominance creates significant imbalances in the global economy. Already this year, China overtook Japan to hold the world’s largest foreign currency reserves, now $875 billion and estimated to grow to $1 trillion by the end of the year.
While placing a great deal of the global surplus and credit in the hands of China, the global imbalance also begins to saddle the U.S. with much of the world’s debt, creating a lopsided economic relationship with China, the world’s most populous country.
In the words of Mr. Macawber: “Annual income twenty pounds, annual expenditures nineteen nineteen six, result happiness. Annual income twenty pounds ought and six, result misery.”