Bilateral imbalances were not a big deal, given that there were lots of countries out there in the world trading with each other, and what really matters was just it evened out overall, said Chad Bown in a recent interview with China Fortune Media Group.
He is a senior fellow at the Peterson Institute for International Economics and previously served as a senior economist for international trade and investment in the White House as one of the members in the Council of Economic Advisers and most recently as a lead economist at the World Bank.
"In any particular bilateral relationship, there are no economic reasons why it should be balanced," he said, "If I export something to you, but there is not really that much from you that I want. You export something to somebody else, and they export something to me. So we are all trading with each other, which will make a balance".
From his perspective, the general cause of the imbalances the United States has with the world is because of its macroeconomic policies, which include tax policies, expenditure policies, fiscal policies, but not its trade policies.
"The imbalances are there because the United States, the consumers, the government, they buy more things, consume more, and invest more than they save," he said.
He held that the United States and China were two economies at totally different stages of development.
"China is growing a lot faster than the United States. The United States is a more mature economy. It has a comparative advantage at producing different types of goods and services than China does," Bown pointed out.
He believed that the two economies could trade with each other, learn from each other and take advantage of how they are different from each other.
"International trade allows consumers to be able to buy goods and services from foreign places that they might not be able to buy locally at low prices. It is beneficial for the whole country," he said.
Trade disputes, from Bown's viewpoint, are quite normal in the trading system. The more countries trade with each other, the more kinds of frictions they are going to have.
"There are going to be allegations that you impose some trade barriers that are making it difficult for my companies to be able to sell into your market, and you are going to use it as an excuse against me, that is quite normal," he noted, "What is important is to have a way to resolve them."
Accordingly, he stated that was what the World Trade Organization (WTO) had been very effective at doing for the last 20 years.
"The WTO helps to resolve those little types of disputes related to a certain product like bananas or steel, and prevent them from bubbling up and turning into something bigger," he said.
However, what worried him was when countries were starting to move away from using the WTO to try to resolve their disputes unilaterally.
"That is one of my big concerns with President Trump and the Trump Administration," he said, "When that happens, we don't know how these disputes are going to end up being resolved."
Bown suggested the Chinese government continue to pursue the kind of market-oriented reforms, which meant lowering trade barriers and tariffs.
"I am not sure it will reduce the bilateral trade imbalances as the Trump Administration expected, but I do think it is still a good thing for the Chinese economy," he said.