5 of GDP rising to more than double that of China

The dissension concerning the rate of exchange between American and Chinese currencies continues. At the beginning of the great recession, many were worried of an unwelcome return to protectionism. The G20 leaders have promised that they had learned the lessons of the great depression. Protectionism was on the whole content largely through the World Trade Organization.

The persistent weakness of the economies however carries the risk of new protectionist thrust. The US Treasury has been charged by Congress to assess whether China "manipulates its currency". While the Obama President pushes for a few months already the date on which the Secretary of the Treasury, Timothy Geithner, must make its report, the concept of "currency manipulation" is biased: all Governments to take measures which affect directly or indirectly the exchange rate. Excessive budget deficits, or of low interest rates, can result in a weak currency. Until the recent Greek crisis, the United States benefited from a favourable rate of the dollar against the euro. Should the Europeans have they accuse US of "manipulating" the exchange rate to encourage exports to their costs

While American politicians focus on bilateral trade deficit with China, which remains important, the central issue is the multilateral trade balance.

Saudi Arabia also has a multilateral and bilateral surplus with the United States: Americans need oil and the Saudis want less American products. Even in absolute terms, multilateral trade surplus of Saudi Arabia, of $ 212 billion, exceeding far in China, for $ 175 billion. As a percentage of the gross domestic product (GDP), the excess of the current account of Saudi Arabia, to 11.5 of GDP, rising to more than double that of China. This surplus would be much higher still if one did not take account of us arms exports to this country.

In a global economy with a chronically low aggregate demand, the current-account surpluses are a problem. But in China today is in fact less than those of the Japan and the Germany combined: as a percentage of GDP, it rises to 5, 5.2 for the Germany.

Factors other than the exchange rate have an influence on the trade balance. Essential is national savings. The United States can seriously reduce their deficit when the Americans will save more.

An adjustment of the renminbi's exchange rate would simply move the source of supply of the US textile and clothing, China, Bangladesh and Sri Lanka for example. At the same time, a re-evaluation of the exchange rate will probably contribute to the increase in inequality in China, whose poor farmers suffer competition on the part of heavily subsidized American farmers. Therein lies the true distortion of the global economy, which means that millions of poor people in developing countries suffer while the United States are helping peasants among the richest in the world.

During the Asian financial crisis of 1997-1998, the stability of the renminbi has played an important role in stabilizing the region. In the same way, the stability of the Chinese currency contributes to strong regional economic growth, enjoyed around the world.

Some experts argue that China must reassess its exchange rate to curb inflation or prevent the formation of bubbles. The Chinese Government contains inflation, but, most importantly, he has a variety of other means (taxes on capital flows and capital gains to a series of monetary instruments) at its disposal.

There is no less than the exchange rate affect on growth models, and it is in the interest of China to restructure its economy to be less dependent on export-led growth. In Beijing, the authorities recognize that the Chinese currency would appreciate in the long term. Give a political dimension to the pace at which this assessment will be however proved counterproductive. On the other hand, cause a bilateral confrontation is really not appropriate.

No one enjoys a trade war. The United States should be wary of starting one in the middle of an uncertain global economic recovery.