The Free Ride of the Creditors
The global trading system does not penalise surpluses. A country can durably suppress domestic demand — restrained wages, high savings, tight fiscal policy — to maximise manufacturing competitiveness. The surplus costs it nothing: deficit partners absorb the adjustment through debt, deindustrialisation and pressure on employment.
Keynes foresaw this at Bretton Woods in 1944: his clearing union and bancor were designed to force creditors to stimulate their own demand. The proposal was set aside. The problem is therefore systemic, not Chinese. South Korea illustrates it — a record $49.7bn current-account surplus in June 2026, driven by semiconductors — and Germany more still, running surpluses of 6 to 8 percent of GDP for twenty-five years inside a euro area stripped of exchange-rate adjustment.
Absent symmetric rebalancing, under-consuming remains a winning strategy — paid for by everyone else.
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