Exchange rate tension and protectionist threats ignore proof that the Chinese and U.S. economies need one another

　　Globalization was a win-win for developed and developing countries for a long time. It doesn't feel that way anymore. Developed countries, after enjoying cheap goods and high incomes for years, are now suffering as jobs dry up. In their eyes, the future looks worse.

　　Against this backdrop, the United States is putting more pressure on China to appreciate its currency. Congress is holding hearings on China's exchange rate, and Treasury Secretary Timothy Geithner is complaining loudly, saying the yuan is moving too slowly. Even President Barack Obama recently had a few critical words about China's yuan policy.

　　The pressure seems to be working C a bit. The yuan has been posting new highs against the dollar, although for the most part only to the second decimal. As a result, the U.S. side is still unhappy and Congress, reflecting its displeasure, soon might pass a major protectionist bill that disrupts bilateral trade.

　　The currency market has not taken this spat seriously. For months, the yuan non-deliverable forwards market hardly budged, and no significant appreciation for the yuan has been predicted.