You can bet that as the presidential election in the United States draws near, the opposing candidates will both be claiming to have a better understanding of what needs to be done to boost the country's economic recovery and create jobs. Yet clearly neither has a plan. Instead, we keep hearing the accusation that China is stealing American jobs by deliberately manipulating its currency to enhance the competitiveness of Chinese exports.

Of course, this tired old lie keeps being batted about because US politicians find it a convenient way to cover up the real causes of the US' malaise. But as the election draws closer, this lie will be accompanied by calls for action to force a revaluation of the Chinese currency.

The US is particularly fond of playing the currency card because its trade policy is, in certain ways, influenced by the 1985 Plaza Accord, which was widely believed to have neutralized the Japanese trade threat by forcing a massive appreciation of the yen against the US dollar.

When I was a reporter working in Asia for a US newspaper in the 1980s, I was amazed by the many stories, some of them written by my colleagues, that grossly exaggerated the threat from Japan. Fear of Japan's economic might reached its zenith after a Japanese company bought the Rockefeller Center in downtown Manhattan in 1989. (The property was later sold back to a US buyer in 1995.)

However, such fears, though exaggerated, weren't totally unfounded. Take the automobile industry. The flood of Toyotas, Hondas and Nissans into the US market nearly obliterated the big-three US automakers. Japanese electronics and electrical appliances dominated the marketplace and pushed many US manufacturers out of the business. In a commentary piece in the newspaper I worked for, the writer lamented that he could not find a CD player in US stores that didn't belong to a Japanese brand.

At that time, US newspapers also carried many stories about what was seen as the "unfair" trade practice of Japan, which reportedly put in place numerous visible and invisible trade barriers to either block imports or drive their prices to unreasonable levels. US cars were a rare sight in Tokyo streets and a secondhand US amplifier in Akihabara cost more than twice as much as a new one in Manhattan.

But while Japan might have been a threat to the US economy in the 1980s, China is not.

In the five years before the signing of the Plaza Accord, the US dollar appreciated an aggregate 50 percent against the Japanese yen. In contrast, the yuan has appreciated more than 18 percent against the US dollar in the past five years. Some US policy-makers and economists continue to maintain that the yuan should have appreciated by a much wider margin than it already has. But trading in the so-called offshore yuan in Hong Kong in recent months has demonstrated that the market believes the yuan's exchange rate against the US dollar has reached equilibrium at current levels.

It should be remembered that the dominant share of the goods the US imports from China are goods manufactured in China under contract from US companies, notably Wal-Mart and Apple, which make the bulk of their profits at the retail end. While we keep hearing calls by foreign governments for further opening-up of the Chinese domestic market, we read many stories of US and European company executives, including those from General Motors and Siemens, talking about their ambitious plans to market their products in China.

Of course, nobody expects the blame game to end anytime soon. But let's hope that the political ranting won't flare up into the clarion call for a trade war.

(China Daily 06/04/2012 page8)