A political columnist makes the following assertion: “China has a huge balance of trade surplus with the rest of the world. In addition, the rest of the world is investing huge amounts in China, which...

“China has a huge balance of trade surplus

with the rest of the world. In addition, the rest of

the world is investing huge amounts in China,

which is the main way that China is able to fund

investments in new factories.” Use your knowledge

of the balance of payments accounts to

analyze the columnist’s argument.