America’s current-account deficit, which was an alarming 5.8% of GDP as recently as 2006, has now shrunk to just 2.7% of GDP – a level that the US can easily finance from its royalty income and returns on prior foreign investments without incurring additional foreign debt. Even more impressive, China’s current-account surplus, which reached an extraordinary 10% of GDP in 2007, is now barely 2.5% of national income.