China-US trade imbalances largely reflect the countries” differing roles in the global economy rather than Chinese subsidies, exchange rates or other policy distortions, Ju Jiandong, chair professor at Tsinghua University PBC School of Finance, said Saturday.
Speaking at the 2026 Tsinghua PBCSF Chief Economists Forum in Beijing, Ju said decades of international specialization have led China to emerge as a manufacturing center and the United States as a financial center, naturally resulting in a Chinese trade surplus and a US trade deficit.
China’s role as a production hub has driven exports of manufactured goods and generated a manufacturing trade surplus, while the US role as a financial center has enabled it to absorb international capital, Ju said. The resulting capital flows are reflected in the two countries’ balance of payments, with China running a trade surplus and the US a trade deficit.
Ju said China’s economy now faces three structural imbalances. The first is external: its manufacturing trade surplus is already large and continues to grow. The second is domestic: insufficient domestic demand is unable to fully absorb the country’s manufacturing output. The third concerns central-local fiscal relations, with the central government retaining fiscal capacity while local governments face tighter fiscal constraints and heavier debt burdens.
Traditional approaches to external adjustment, however, may not resolve these problems, Ju said. If China were to rely on renminbi appreciation or trade measures to narrow its surplus, export competitiveness could weaken and manufacturing employment could come under pressure. At the same time, the impact on the trade surplus would remain uncertain, and the underlying structural surplus might persist.
Ju proposed internationalizing renminbi-denominated government bonds as a way to achieve what he described as a three-way economic rebalancing. Under his proposal, the central government would issue 10 trillion yuan ($1.49 trillion) of renminbi-denominated government bonds overseas, increasing China’s external liabilities by the same amount.
He said the proceeds could be allocated in three areas. Among the total, 2 trillion yuan would be used to raise the average monthly per-capita pension for urban and rural residents to 1,000 yuan. Another 4 trillion yuan would be used to purchase local government debt, supporting local fiscal spending and investment. The remaining 4 trillion yuan would finance additional central government investment.
Ju said issuing the bonds overseas could also accelerate the internationalization of the renminbi and create a supply of safe assets for global investors.
China’s economic rebalancing will require long-term structural reforms, Ju said. He argued that it is difficult for any single policy to simultaneously address the interests of China and the international community, urban and rural residents, and central and local governments. In his view, the internationalization of renminbi-denominated government bonds could address these multiple objectives at the same time.
The Tsinghua PBCSF Chief Economists Forum is an annual event organized by the Tsinghua University PBC School of Finance and hosted by the Center for International Finance and Economics Research at Tsinghua PBCSF. The forum regularly invites internationally renowned chief economists and leading scholars to discuss pressing issues in the Chinese and global economies, with the aim of promoting academic, market and policy dialogue.