In a piece in the New York Times, Eduardo Porter says that China's trade surplus with the rest of the world has "largely disappeared."  And as a result, Treasury Secretary Tim Geithner will "have a harder time making the case that America’s trade deficit is somehow China’s fault" at this week's U.S.-China Strategic and Economic Dialogue (S&ED).

Porter overlooks a key point, however.  The U.S. trade deicit with China reached a record $295 billion last year.  Simply put, the United States is China's massive go-to market of last resort.  In fact, China is now responsible for more than 70% of America's goods deficit with the rest of the world (excluding petroleum).

China has wisely geared its export strategy toward selling into the U.S. market.  And thanks to mercantilist practices, including dumping, subsidies, and currency manipulation, they've succeeded in a big way. 

Thus, while China may not being selling as much to the rest of the world, it is doing great, profitable business at the expense of U.S. manufacturers and their workers.

Contrary to Porter's views, addressing China's curency misalignment should be prominently addressed at the S&ED.