Stop piling up greenbacks to build a more balanced economy

In recent months, US economist Paul Krugman wrote several op-ed pieces calling on the US government to take on China. He is a respected economist, but his campaign is not only counter-productive in terms of solving the China-US trade dispute but also based on flawed economics.

In 2009, China registered a growth rate of 8.7 percent, which was hailed by the international community as a significant contribution to the global recovery. However, for Krugman, "most of the world's large economies are stuck in a liquidity trap China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies. China's policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery."

In Krugman's view, by running a trade surplus, China must be a drag on global recovery. He forgot one important fact that while China has a trade surplus, the growth rate of China's trade surplus fell significantly in 2008, and turned negative in 2009.