China’s trade deficit

“While China is running a large ($100 bn in 2002) bilateral trade surplus with the US, its trade balance with the rest of the world is in deficit, at $75 bn.” From today’s Financial Times (registration required), Morris Goldstein and Nicholas Lardy argue that only a modest revaluation of the renminbi [yuan] is needed.

Japan is the biggest source of China’s trade deficit, so clearly a high-wage country can have a trade surplus with China, are you listening trade protectionists?