New Delhi, May 15 -- As Donald Trump and Xi Jinping engage in high-stakes talks in Beijing, the underlying context is that global imbalances are widening again, with the US and China at the centre. But the central economic problem between the world's two big economies is being misdiagnosed.

The US-China imbalance is not fundamentally a trade policy problem. It is a structural macroeconomic imbalance rooted in savings, investment, fiscal choices and the architecture of the international monetary system.

Until those drivers are addressed, tariffs and bilateral deals will merely reshuffle trade flows while leaving the underlying imbalance intact.

At first glance, Trump's complaint appears intuitive. China's exports are surging. Its manufa...