"Now if the initial cause was the PBoC capital exports, of course the Fed could possibly have foiled the capital impact of the PBoC intervention by raising interest rates and forcing up unemployment in the US.
This is the point that Martin Wolf has often made, and if the Fed had done so it might have caused private businesses to cut back on their investment more quickly than the resulting decline in savings, and the US could have effectively blocked capital
imports. The rising unemployment would have reduced US consumption and US imports, which would have reduced the US current account deficit. Remember, these are just the opposite sides of the same coin and one automatically implies the other. If the excess of investment over savings declines, so does the current account surplus.
For whatever reason, right or wrong, the Fed didn’t do this. The result was that the US had to run a capital account surplus. In the US, however, there are two ways the capital account surplus must resolve itself. Since the capital account surplus is equal to the excess of investment over savings, if the capital account surplus rises, broadly speaking, either savings must decline, or investment must rise (or some appropriate combination of both in which the excess of investment over savings rises)."