Together with the large trade and current account deficits of the United States, the Chinese external surpluses are contributing to the current pattern of global imbalances, which many economists and policymakers have argued are unsustainable in the long run.
It is true, that loose fiscal policy in the previous period created external imbalances; however until early 2008 all segments of our financial markets enjoyed ample liquidity, while GDP growth was driven by dynamic exports. At that time, few people thought that these can be the symptoms of a bubble just about to burst.