China has warned the rest of the world — again — to back off on demands to let its currency rise. Dan Drezner comments:
China's strategy here is of a piece with their behavior over the past nine months or so, which, intentionally or not, could be characterized as "Pissing Off as Many Countries As Possible."
Seriously, it's a distinguished list. The Europeans are furious at China because of how the country acted at Copenhagen. The Japanese and South Koreans are furious at China because of how Beijing has handled the Cheonan incident. India is unhappy with China's naval aspirations, nuclear aid to Pakistan, trade imbalances, and an unsettled border. A fair number of ASEAN nations are upset with China's currency policies and its reassertion of territorial claims and spheres of influence in the South China Sea. And then there's the United States, where despite some understanding between Obama and Hu, the People's Liberation Army and the Ministry of Commerce seem bound and determined to derail any warming trend between the two countries.
My guess is that Chinese authorities just don't feel like they have any choice. They've got a tiger by the ears and no good way to get it under control. More broadly, they seem to have fully bought into the idea that any growth rate less than 8% or so spells doom, and that simply doesn't give them any breathing space. So they're holding on for dear life and figuring that Western annoyance, as usual, will be fairly transient. We gotta have someone to make cheap toys for us, after all, the same as we gotta have cheap oil. So we'll gripe at China for a while, just like we'll gripe about OPEC from time to time, but in the end we put up with trade deficits from both — a bigger one from OPEC than from China — because we don't really know how to correct the imbalances in our own economy that prompted the deficits in the first place. We're riding the same tiger as everyone else.