Xinhua squawks today about Mitt Romney's warnings of Chinese currency manipulation.
In a strongly worded English-language commentary, Xinhua said Romney's anti-China rhetoric, if converted into policy upon him assuming office, would trigger a catastrophic trade war and damage the already weak global economic recovery.
"It is rather ironic that a considerable portion of this China-battering politician's wealth was actually obtained by doing business with Chinese companies before he entered politics," Xinhua wrote.
"Such blaming-China-on-everything remarks are as false as they are foolish, for it has never been a myth that pushing up the value of China's currency would be of little use to boost the chronically slack job market of the world's sole superpower, not to mention to magically turn the poor U.S. economic performance around."
Something seems amiss in the final sentence of the quote, but you get the idea.
But is it actually Romney with whom the Chinese are most annoyed? Yesterday's Fed announcement of a third round of Quantitative Easing - this round to last indefinitely - poses fierce challenge for China. China does not formally peg its currency to the dollar, but it boldly intervenes to maintain a steady exchange rate, today 6.31 yuan renminbi to the dollar. If the US eases, China must engage in ever more vigorous interventions to match. Given that the US is struggling to avert deflation while China faces accelerating inflation, these interventions create daunting and ever-escalating risks to the Chinese authorities.
And if a Romney administration were to treat China's currency interventions as a treaty-prohibited form of dumping, China's problems would escalate further. We all know why China acts as it does: it must export to create jobs, it must create jobs to preserve social stability. But Americans also have social stability to worry about, here's the question to ponder: How much -- and how long -- will the US accept job losses at home to support the Chinese leadership's theory about what is necessary to prevent revolution in China?