America shouldn’t try to correct its record-high trade imbalance with China by rushing to increase exports

As US Treasury secretary Henry Paulson meets in Beijing with Chinese vice-premier Wu Yi to discuss the US-China trade balance, the US commerce department has just released its monthly report on the widening trade deficit. Journalists report this in hand-wringing terms that consistently reflect little understanding of real economics. "Oh no, imports from China are up," blares my radio. "The only solution is to increase American exports to China."

And that’s supposed to be the free-trade position, a counter to the argument for tariffs or other coercive measures to prevent China from forcing its products on innocent American consumers. (I’m omitting the safety and health problems with Chinese products for now, as we heard the same economic complaints when Japan was the biggest non-white exporter to the US. Somehow we’ve never worried so much about imports from Canada, the UK and Germany.)