New Delhi, Dec. 1 -- As China's trade surplus grows, with its merchandise exports increasingly dominating global markets, the rest of the world is grappling with how to respond. Should countries erect trade barriers against China? Try to decouple from China by reshoring manufacturing and building national supply chains? Emulate its strategy of boosting manufacturing through industrial policies?

Policymakers must begin by asking why China's exports are a problem in the first place. After all, cheap imports epitomize the gains from trade. In important areas such as renewables, Chinese innovation and manufacturing prowess have produced significant climate benefits-a global public good. Moreover, bilateral trade deficits on their own are of ...