US-China relations, and the respective national interests which underlie them, are generally harmonious. However, this is occasionally jarred by sharp discord. At present, the discord arises from legislation pending in the US Congress to put pressure on China to substantially raise the value of its 'misaligned' yuan, relative to the US dollar.
Washington's aim is to reduce the mainland's large current account surplus with the US (nearly US$200 billion last year) which, it is contended, is appreciably affected by Beijing's deliberate policy of undervaluing the yuan.
The internal American politics behind this measure is complex, and in any event, its economic logic is basically flawed.
The source of China's global surplus - and its surplus with the US - lies in an excess of domestic savings (about 40 per cent of its approximately US$5 trillion gross domestic product) over its domestic investment rate (about 35 per cent of GDP). The American economy is characterised by a precisely opposite imbalance: an excess of gross domestic investment over domestic savings.
If, and when, these basically symbiotic imbalances become unsustainable, tinkering with the yuan/dollar exchange rate will have little influence. Quite different policy changes will be required if, for example, the US savings rate is to be boosted, and China's rate is to be lowered. Moreover, if these changes are to be accomplished without triggering a recession in the US and inflation in China, the exchange rate will be the result - not the cause - of the necessary changes.
Beyond the symbiotic relationships between the two economies, the nations' national interests are in close harmony. Both have a major interest in maintaining and enlarging a free and open global trading system, and encouraging global capital markets that allow free capital flows in both directions, facilitating American investment in China, and vice versa.
As the world's first and second largest importers of oil, the US and China have convergent interests in increased and diversified sources of supply, as well as moderate and relatively stable oil prices. Both also share a strong interest in developing efficient alternatives to fossil fuels.