The development of global value chains (GVCs) in recent decades has transformed China into a global hub of manufacturing and assembly. Most of China’s exports to the USA are in the context of value chain trade. The deep participation of Chinese firms in GVCs has greatly promoted the rapid growth of Chinese exports to the USA, as well as China's trade surplus with the USA (which triggered the ongoing US-China trade war). Toward an understanding of the complexity of the bilateral trade imbalance, this chapter adopts the GVC perspective in its analysis of the success of China’s exports to the USA and of the persistent huge US trade deficit with China. It shows that conventional trade statistics seriously distort the bilateral trade imbalance by on the one hand exaggerating China’s surplus and on the other hand underestimating actual exports of the USA. In addition, the chapter discusses the impact of the trade war on China-centered GVCs and argues that it is impossible to hedge the risk of the punitive tariffs with the depreciation of the yuan. Shifting part of value chains out of China would be inevitable and the coronavirus pandemic would further strengthen the trend.