In my view, the most important reason why China should not run a current account surplus consistently against the U.S. is simply because China is one of the poorest countries in the world, and should not engaging in financing the consumption binge of the richest country in the world.

China is running "twin surpluses" - current and capital account surpluses. It means that while importing capital in the form of FDI and foreign debts with high costs, it exports capital in the form of piling up greenbacks and U.S. treasuries with low yields or no yields at all. By doing so, China has been engaging in a massive wealth transfer to the U.S.. How could Krugman argue that China is "making everyone else poorer"?

The losses incurred in financial transactions between China and the U.S. could be trivial compared with the capital losses China may suffer in the future. China has parked its savings in the U.S. treasures while U.S. fiscal debt ratio has been surging.  More from Xinhua here.