Core Viewpoint - The article discusses the persistent trade deficit of the United States since the early 1970s, highlighting its implications for the U.S. economy, the sustainability of the dollar, and potential strategies for China to mitigate external economic pressures [1][3]. Group 1: U.S. Trade Deficit and Debt - The U.S. has maintained a significant trade deficit, which has led to a current account deficit and a rise in net foreign debt relative to GDP, indicating a declining ability to service this debt [1][4]. - As of 2024, the U.S. overseas net debt reached $26 trillion, exceeding 90% of its GDP, which raises concerns about the sustainability of U.S. debt obligations [7][8]. - The U.S. has experienced a historical average current account deficit to GDP ratio of around 2% since 2008, despite a rising overseas net debt to GDP ratio [4][8]. Group 2: Foreign Investment and Dollar Demand - Foreign investors' willingness to hold U.S. assets, particularly government bonds, is expected to decline due to rising overseas net debt, which undermines confidence in the U.S. ability to meet its debt obligations [7][9]. - The demand for U.S. dollar assets is influenced by the dollar's status as a reserve currency, with approximately 57%-59% of global official foreign exchange reserves held in dollars as of 2024 [5][6]. - The U.S. government's tariff policies and potential dollar depreciation are likely to further diminish foreign investors' interest in U.S. assets, leading to increased inflation and reduced purchasing power of the dollar [9][10]. Group 3: China's Economic Strategy - China is advised to gradually reduce its holdings of U.S. Treasury bonds while expanding domestic demand to offset negative impacts from external economic factors [1][12]. - The country should aim for a balance in its current account, potentially allowing for a trade deficit in certain periods to convert excess dollar reserves into tangible resources [13][14]. - Structural adjustments in China's economy are necessary to reduce reliance on exports and enhance domestic consumption, which may be accelerated by external pressures such as U.S. tariffs [15][16].