The US just shouldn't and can't be too clever

Comments on Karen Maley “Inching towards a trade war”, 5/02/2010, http://www.businessspectator.com.au/bs.nsf/Article/China-packs-a-punch-pd20100205-2CRK5?OpenDocument&src=sph

There is a practical also easy solution to the currency problem.

The US government would have to guarantee the real value in Chinese currency for Chinese official holding of the US bonds.

Everyone understand that any appreciation of the Chinese currency against the $US now means the Chinese will lose in the value of its holding of the US bonds.

The US should not and cannot make fool of the Chinese leaders in such a stunt by demanding they make a direct loss by their currency appreciation. That is just a game too crude and lack of intelligence.

Once that is done, the Chinese is likely to be more willing to allow its currency to appreciate.

Otherwise, the Chinese government would have a huge political problem with the Chinese public, given that any issues can further exacerbate the unsatisfaction that they already have.