The US needs to cut its trade deficit, China its surplus.

And with East Asia, unlike with Europe and America, China tends to run trade deficits.

So how can we eliminate, or at least drastically reduce, our trade deficit with China?

China' s big surpluses and America' s big deficits depend on the real exchange rate between them and all of their trading partners.

It would shift the Chinese piece of the US trade deficit to someone else - most likely to a higher cost producer.