Part 2/8:
To comprehend the gravity of China's actions, it's vital to grasp the structure of international trade and finance through three key accounts: the current account, the capital account, and the financial account. These three components must sum to zero, functioning together like an equilibrium in trade.
The current account measures a country’s trading balance, including imports and exports, while the capital account encompasses borrowing, lending, and investment flows. Typically, these accounts balance each other out; for instance, when a country experiences a trade surplus, it often reinvests those profits in foreign assets such as US Treasury bonds.