This is China’s response to Obama’s and Europe’s pressure to allow their currency to appreciate.

“Now some countries, on the one hand, want the renminbi to appreciate but, on the other hand, engage in brazen trade protectionism against China,” he said. “This is unfair. In fact, it amounts to restricting China’s development.”

Our strategy is flawed.  Diplomacy has been exhausted.  Bush’s Hank Paulson failed before.  Obama himself brought up the issue in China in November.  Nada.

New strategy.  They take unilateral action in their perceived national interest… pegging their currency.  We take unilateral action… measured countervailing the subsidy effect of their currency undervaluation.  No trade war.  Mere staged neutralization.