The overall U.S. trade deficit in goods and services (seasonally adjusted) edged down in November to $38.3 billion from $38.4 billion in October. Meanwhile the U.S. trade deficit with China in goods edged up to $25.6 billion from $25.5 billion, as shown in the following graph:
Demand in China is currently growing at about a 10.5% per year pace while demand in the United States is growing at about a 2.5% per year pace. Normally, this discrepancy would cause China's demand for American products to grow much faster than American demand for Chinese products. However, China practices mercantilism and America practices unilateral free trade.
Chinese President Hu will be visiting the United States from January 18-21. WTO rules let any country that has with both a net foreign debt and a balance of payments deficit enact a scaled tariff to balance trade. President Obama could insist that Hu reduce China's trade surplus with the United States.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I own Chinese yuan though CYB and I also own shares in Vanguard Emerging Markets Stock Index Fund (MUTF:VEMAX)