In that case, Germany s surplus means that the rest of Europe is in deficit.

So bringing the savings rate down is necessary if domestic and external balances are to be achieved.

Indeed, if foreign owned enterprises exports are deducted from the total trade volume, the surplus vanishes, because both the overall balance of merchandise trade and the balance of trade in services normally run deficits.

But the flip side of the trade surplus is the capital outflow.

The US has complained about China s current account (trade) surpluses but, as a percentage of GDP, Germany s surplus is even greater.

With the global economy recovering, China s trade surplus began to grow.

Indeed, countries from Singapore to Russia are running large surpluses.

China's current account surplus and export growth have, indeed, fallen.

China, the world s growth superstar, has a huge current account surplus, which means that it is a net lender to the rest of the world.

That country has a trade surplus. It exports more than it imports.

But John Maynard Keynes pointed out that surpluses lead to weak global aggregate demand countries running surpluses exert a negative externality on their trading partners. Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity he went so far as to recommend a tax on surplus countries.

Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity he went so far as to recommend a tax on surplus countries.

So its trade surplus continues to soar at the expense of other countries.

Given China s massive current account surplus (12 of GDP), the renminbi is still undervalued.

This is the strongest decline in net foreign demand facing a single country, or, equivalently, the strongest increase in a country s net demand for foreign goods.

Partly by design and partly by chance, about a decade ago China found itself consistently accumulating large amounts of foreign reserves by running a trade surplus and intervening to buy up the dollars that this generated.

In a global economy with deficient aggregate demand, current account surpluses are a problem.

This makes the renminbi chronically undervalued and assures China of a persistent large trade surplus.

Japan s trade balance fell into deficit in 2011, for the first time since 1980.

Its launch has sharply weakened the yen and is now leading to rising trade surpluses.

Germany , Europe s largest exporter, has a very large trade surplus with the rest of the world.

Had this effort been continued for two more years, a primary surplus could have been realized.

To be sure, China has accumulated an enormous balance of payments surplus, which indicates that the renminbi is greatly undervalued.

But the surplus merely masks the structural problems of China s domestic economic sectors and poorer regions.

They would run down their trade surpluses and, in some cases, allow their currencies to appreciate.

Australia has been a particularly large beneficiary of Chinese growth, which is relatively commodity intensive. This has tended to increase metals prices, fueling Australia s large export surplus in metals.

Manufacturing production has plummeted, the trade balance has deteriorated sharply, and corporate bankruptcies are increasingly frequent.

The arithmetic of global trade implies that the sum of all trade deficits equals the sum of all trade surpluses. If some countries, say, Japan and China, insist on running huge surpluses year after year, then other countries must run deficits.

Trade and immigration (legal and illegal), if left unchecked, will continue to exert downward pressure on rich countries labor markets.

The arithmetic of global trade implies that the sum of all trade deficits equals the sum of all trade surpluses.

China has yet to discover and adopt an alternative growth strategy that does not rely on a large trade surplus.

The deficits are as much the fault of the surplus countries as they are of the deficit countries.

Its trade balance is positive, and total public debt is not as high as it is in other countries.

According to the International Monetary Fund, the budget deficit is declining, and the primary surplus (net revenues minus interest payments) is growing.

One regular aspect of post war Latin America has been that such bonanzas have been undermined by large current account deficits, and thus indebtedness.

So China continues to run a giant trade surplus, and the US continues to spend and borrow.

Moreover, it is hard to see how anyone even the IMF, as the US proposal envisions could enforce caps on trade surpluses.

And an unwillingness to trade away export led growth is having the same effect on the East s surplus countries (especially China).

Russia is also thought to no longer need help because its economy and public finances are much improved, thanks to rising oil prices and a GDP growing at 6.5 per annum.

But some, particularly American politicians in this presidential election year, focus on only one thing China s trade balance.

Until recently, Russia has pursued an admirably conservative macroeconomic policy, running up huge budget and current account surpluses.

China s purchases of American debt effectively transferred the official reserves gained via China s trade surplus back to the US market.

As incomes in China grow, imports from other low or middle income countries rise faster than imports from high wage countries. China's trade surplus with the US exceeds 100 billion, but it runs a deficit with India.

Germany s exports exceeded its imports by nearly 200 billion in the past twelve months, a surplus equivalent to nearly 6 of GDP.

Indeed, Russia is running fiscal and current account surpluses of 2 and 17 of GDP respectively.