China is a currency manipulator and, unless its officials change their wicked ways, we will take them to task: that was the message from senator Barack Obama on the 2008 presidential campaign trail. Back then, the exchange rate was 6.83 yuan to the US dollar. Almost two years and one global financial crisis later, the exchange rate is still 6.83 yuan to the dollar, and President Obama and his team have fallen strangely silent.
That silence may mean Beijing and Washington have reached an informal understanding. Back in April, the US Treasury decided to delay publication of a report to Congress on international exchange rates - a report that might have officially designated China a currency manipulator.
That decision came shortly after a visit to the US capital by Zhong Shan, China's deputy commerce minister. Whispers from Washington suggest that, though no concrete assurances were given, Zhong's visit did at least result in a meeting of minds. The US would dial down the rhetoric on the exchange rate and China would proceed with appreciation, at its own pace, but within a reasonable time frame.
For many in Washington, a reasonable time frame meant before the next meeting of the strategic economic dialogue - the annual China-US talk fest set to take place in Beijing today and tomorrow. But expectations of an early resumption of appreciation appear increasingly misplaced.
Why the delay? Look no further than the European sovereign debt crisis. The European Union might have belatedly mounted its white horse to ride to the rescue of the Greek damsel in distress. But the episode has rung alarm bells in Beijing, suggesting that the global financial crisis has yet to run its course and the time for the resumption of yuan appreciation is not yet right.
If a resumption of appreciation in advance of the meeting was too much to hope for, maybe a little table thumping in the meeting itself will do the trick?
