That's not true in the slightest [0]. Trade can be imagined as transactions on a two sided ledger. Investment can be seen as a trade of capital for a claim on future returns from the investment.
Yes, I don't think you understood what the link was saying:
"The United States runs a deficit in trade and a surplus in investment and lending, meaning that foreign investors step in to make up for the shortfall in domestic savings."
Trade clearly excludes investment and lending in that sentience.
PS: It's meaningful to talk about the exchange of goods as independent from investment and that's what trade is referring to. Otherwise everything is going to zero out which is a less useful definition.
You're mischaracterizing the source through selective quotation of a summary of a 29 page article on the subject. For some context around your quotation:
"""Foreigners who sell America goods will either spend the dollars they earn on US exports or assets or exchange the dollars with someone else who wants to buy US exports or assets. Thus, America’s international accounts are always balanced.
* The United States runs a deficit in trade and a surplus in investment and lending, meaning that foreign investors step in to make up for the shortfall in domestic savings. As long as domestic savings lag behind investment, foreign investors will make up the difference.
* Deficits with a single country are meaningless. Just as individuals have “trade deficits” with their grocery store, so do nations run deficits and surpluses unevenly with one another, and it is impossible to eliminate these deficits without addressing the gap between domestic savings and investment.
CONCLUSION
America’s commercial trade with the rest of the world is a part of a complex, interrelated system. If the US government intervenes by turning the spigot to change the flow of dollars through one set of pipes, it will of necessity change the flow through other pipes. It is a contradiction to decry the outflow of dollars to buy imports while at the same time seeking to increase sales of US exports or investment in the US economy."""
Again even within that quote it's: "on US exports or assets or exchange"
You are ignoring the or, if it said 'on US exports such as assets' then you would be correct in your interpretation.
Exports are a subcategory of total trade, which again is a useful distinction otherwise they would say trade not Exports. This was intended to confuse without being wrong, but exports and trade are meaningfully different and used in context correctly, but you are interpreting them as the same thing when they are not.
PS: Another way of stating this is trade must be balanced. I exchange one apple for one orange then by the existence of the trade the implication is the orange and the apple have equivalent value with each side valuing the others item more than their own. That's still true if you replace apple with Yen or whatnot which is again why trade deficits are only meaningful when you only look at goods.
And it does nothing to reduce trade deficit. If anything it increases the trade deficit.
Let me give an example: If Tesla builds a factory in Shanghai, even if it does not import these cars back into the US, it can substitute the current export of US-made cars into Asia and thereby reduce US exports and increase US trade deficits.
Sure, it does: net inbound capital flow is necessarily equivalent to trade deficit, so increasing net investment from US to China necessarily reduces the US-China trade deficit (or, increases the China-US one if you do enough of it.)
This is also why trade policy may not be the most effective mechanism to addressing as trade deficit (if you even need to address it, which is a different debate.) Instead, just address the pattern of domestic investment: the more domestic investment opportunity is taken by domestic investors, the lower the capital inflow and the lower the trade deficit.
The keyword here is "net". What you are asking for is free capital flow, mostly in the form of financial market capital. That is not what is discussed here about JV, technology transfer and whatnot. FDI inflow into China can be easily sterilized.
And there is no guarantee with free capital flow you will get net inflow into China. If anything there was an even larger outflow before China tightened up the control. And even if you managed a net inflow into China, there is no guarantee it will reduce the bilateral trade imbalance with US per se, so long as the demand for US assets is not reduced.
Of course if you meant that US could impose capital control to make trade deficit go away, I would agree.
I don't know, maybe because it has the word "deficit" in it. Maybe we should rename it "dollar winnings" or "greenback surpluses". I am pretty sure the trade deficit is driven by the desire of people outside of US to own dollars and dollar denominated assets. As long as US has the strongest military and is seen as the haven for the rich people around the world to park their earnings the trade deficit will always be there, unless capital control is imposed.
it's also not trade.