China’s trade war contingent made an unexpected proposal to their American counterparts to get rid of the bilateral trade surplus by 2024, according to officials speaking to Bloomberg.
The plan would require China boosting its imports from the US by over $1 trillion worth of goods over the six-year period. Last year China’s trade surplus was $323 billion.
According to the sources, US officials pushed even further on the offer and demanded that the surplus be wiped out in just two years. Some economists say that this would be hard to implement given the structure of China’s global trade relations and the fact that much of the surplus comes from strong demand for Chinese goods.
“If China switches its imports from other countries to the US – less Brazilian soybeans, more US soybeans – that might help deal with their bilateral problem with the US, but at the expense of worsening imbalances with other countries,” said Bloomberg’s Tom Orlik.
Closing the trade gap “would require enormous changes and it would require an all-out effort to get a Chinese industrial policy to disguise China’s exports to the U.S. by routing them elsewhere,” said Brad Setser, former deputy assistant secretary for international economic analysis in the Treasury during the Obama administration. “You can’t get rid of the bilateral deficit unless you shift the location of final electronics assembly out of China. The math doesn’t work.”