When major economies are running at near full capacity, it is not clear that trade deficits should be a cause for concern, since they represent a transfer of purchasing power from surplus countries. Under the current circumstances, then, China’s widely criticized surpluses might as well be called enrich-thy-neighbor.

Dani Rodrik shows why the most common criticism of the country's surpluses and broader economic model falls flat.

When major economies are running at near full capacity, it is not clear that trade deficits should be a cause for concern, since they represent a transfer of purchasing power from…