Dr. Setser has criticized “the popular and the elite debate on China” of “lag[ging] what’s in the data” and has written extensively to track in detail the U.S. trade deficit and China’s surplus (read more here, here, and here). In a July 2020 analysis, Dr. Setser questioned the likeliness that China is on track to meet the Phase One purchase requirements and concluded that “here won’t be any big gains from the Phase One deal.” Dr. Setser added: “A different deal—one focused less on headline purchases and more on removing specific barriers (the tariffs and health rules that limited trade in chicken parts and the like) might have delivered sector specific gains without so obviously falling short of the overall target.”

In a March 2020 Foreign Affairs article, Dr. Setser argued that a more expansive and progressive system of social insurance in China would lead to a higher rate of consumption, which would benefit both China’s domestic policy and alleviate the root cause of the trade deficit. He has written about the danger of the deficit as early as 2005 but has not appeared to have written on this topic as of late. . In recent blog posts, Dr. Setser also analyzed China’s balance of payments to indicate the possibility that “China’s authorities are resisting pressure on the yuan to appreciate” and analyzed the effectiveness of China’s agricultural and seafood tariffs. 

Dr. Setser’s concerns for both trade deficit and balance of payments were echoed in his February 2019 testimony before the Senate Committee on Small Business & Entrepreneurship, where he emphasized “the importance of macroeconomic balance and a fairly valued Chinese currency to a balanced overall commercial relationship.” Another part of the testimony addressed “the specific challenges posed by China’s import-substituting industrial policies.” Dr. Setser believes that the policies outlined in Made in China 2025 are especially troubling to the United States because “China’s state is uniquely able to ‘rig’ China’s domestic markets in ways that discriminate against foreign firms.” He has also warned about China’s destabilizing “influence over the purchases of large state-enterprises,” subsidized purchase of leading-edge global firms with state funds “and in some cases, supporting efforts to steal technology from foreign firms.”