Last week's CNBC interview with Microsoft CEO Satya Nadella contained a fascinating data point: Microsoft counts China as its second-largest revenue stream, behind only the U.S., according to FactSet estimates.
The simple fact that China accounts for a huge portion of Microsoft's annual revenue isn't surprising. But it's a potent reminder of China's growing economic power.
China and U.S. are major trade partners, and our destinies will be intertwined for the foreseeable future. When the Chinese economy suffers, we suffer - and vice versa.
On Saturday, I read an interesting article in the South China Morning Post. The article quotes Cui Tiankai, China's ambassador to the U.S. According to Cui, China considers the $375.2 billion trade imbalance between the two nations as problematic.
Cui made it clear that China sees the trade imbalance as an obstacle to progress. "For us, such an imbalance is already a problem rather than a benefit," he says.
The Chinese media is playing down the issue, and Cui says he doesn't believe the imbalance will continue. He even sounded optimistic that the two nations could work out a deal, saying that he supports talks to reduce the trade imbalance. According to the article, Cui predicts such talks would be successful.
So where do we go from here? The rhetoric from Washington seems calculated to rally trade protectionists in the U.S. But that would only be a short-term goal. Long-term, it would be better to work with the Chinese to resolve the trade imbalance amicably and equitably.
The trade imbalance hurts both China and the U.S. Like Ambassador Cui, I am optimistic that a satisfactory deal can be hammered out.
Additionally, the absence of saber-rattling is a good sign. From my perspective, the lack of enmity shows a real willingness on both sides to solve the problem and open the door to more trade. I'm a strong believer in trade, especially when it promises to enrich billions of people, all over the world.
I hope I'm not being too optimistic when I say it's amazing how far we've come. In a previous century, a trade imbalance of this magnitude might have led to war. Now, the next move seems to be scheduling a round of talks.
Economists, historians and political scientists have theorized for years that trade and peace are linked. Today, we're getting the opportunity to test that theory.