On January 1, France assumed the presidency of the G-7, the long-standing forum of advanced economies. Paris has placed “global imbalances” at the centre of the group’s agenda—specifically, the large current-account surpluses and deficits of countries such as China and the United States. The theme evokes memories of 2006, when similar anxieties dominated global economic discussions, just before the global financial crisis erupted two years later.
Politically, the choice is understandable. If US President Donald Trump and European leaders can still agree on anything, it is that China’s trade surpluses pose a challenge. For President Emmanuel Macron, the agenda also serves a domestic purpose—deflecting attention from France’s own fiscal difficulties while projecting leadership on the world stage. Economically, however, whether global imbalances deserve this renewed prominence is far less clear.
Are global imbalances really back?
By headline numbers, today’s imbalances appear smaller than those of the mid-2000s. The International Monetary Fund estimates the US current-account deficit at about 4.6% of GDP in 2025, below its 2006 peak of 6.2%. China’s surplus, meanwhile, has fallen to around 3.3% of GDP, compared to nearly 10% in 2006.
But these ratios alone are misleading. China’s share of global GDP has tripled since 2006 at current prices—the metric that matters for traded goods. Adjusting for scale, China’s surplus today has an impact on the world economy comparable to that of 2006. Since the US and China together account for roughly 40% of global output, the combined imbalance between them is not far from pre-crisis levels.
Lessons from 2008: imbalances were not the real culprit
Yet history cautions against drawing a straight line from imbalances to crisis. The global financial crisis was not caused by current-account deficits and surpluses, but by reckless risk-taking, opaque financial instruments and lax regulation—especially in advanced economies.
Fast forward to today, and risks to financial stability are again visible: the rapid growth of private credit markets, inadequate oversight of crypto assets, complex and circular financial flows linked to data centres and semiconductor investments, and a loosening of bank supervision in the US. These dangers echo the past, but they are largely independent of global imbalances.
Where imbalances and financial risk intersect
One area does link imbalances to instability: the surge in US investment in data centres and advanced chips. Such investment accounted for nearly 80% of the increase in US final private domestic demand in the first half of 2025. Since the US current-account deficit reflects the excess of investment over saving, this investment boom has mechanically widened the deficit.
Reducing investment would shrink the deficit—but at the cost of slower US growth, which would harm both the American economy and the rest of the world. This underlines the danger of treating imbalances as a problem to be “corrected” without regard to their underlying drivers.
The Lawson Doctrine revisited
This debate recalls the Lawson Doctrine, named after Nigel Lawson, who argued that current-account deficits are benign if they reflect strong investment rather than weak saving. Subsequent experience added a crucial caveat: investment-driven deficits are safe only if the investments are productive.