Despite recent reports ostensibly showing improvement in the U.S. balance of trade with China, Michael Pettis argues that in fact our trade deficit with the Chinese will continue to worsen. Indeed, U.S. trade deficits have steadily increased each month since the beginning of 2009, with the exception of the narrowing by $8 billion from June to July. That stat may have given false hope, however, as it was the result of a 2.1% decline in imports rather than a boost in U.S. exports. Because of anomalies like this, Pettis says trade numbers are “largely useless in explaining trade imbalances." China’s portion of the U.S. trade deficit has actually risen, even though the total U.S. trade deficit and Chinese trade surplus as a whole has dropped ever so slightly. China has greatly boosted its purchases of Japanese yen this year, raising that currency's value and thus making Japanese goods less competitive with their Chinese counterparts on global markets. Pettis speculates China may be “stockpiling” commodities as an “investment, or anticipated consumption” rather than what is currently being consumed and that the real trade balance is foggy when including these types of trade numbers. According to Pettis, there will be a continual increase in the U.S. trade deficit regardless of choices made by U.S. consumers because the problems lie in events and foreign policies overseas. Pettis states that not if, but when the U.S. takes action to retaliate, U.S. trade deficits will inevitably rise even further.