■"U.S. Warns China About Currency: Cites Impact on Trade and Hints at Retaliation," by Edmund L. Andrews, New York Times, 18 May 2005, p. A1.

■"U.S., China Press Yuan Row: New Shanghai Trading System May Open Door to a Compromise," by Andrew Browne, Wall Street Journal, 19 May 2005, p. A2.

■"China's Growth Ebbs, a Deterrent To Revaluation," by Keith Bradsher, New York Times, 19 May 2005, p. A1.

■"China Rejects Calls for Currency Changes and Limits on Textile Exports: Beijing says the U.S. and Europe are using double standards," by Chris Buckley, New York Times, 19 May 2005, p. C4.

■"China's Trade Edge: Less Than It Seems," letter to the editor by Albert Keidel, Washington Post, 19 May 2005, p. A26.

The conversation gets tougher between America and China on the yuan being artificially pegged to the dollar. Both sides will ratchet up the rhetoric while simultaneously working the short- and medium-term workarounds, like the new Shanghai electronic trading system that will provide still more bricks for the technical architecture that China needs to have in place to deal with a floating yuan. In short, China knows the days of the pegged yuan are numbered, but it's naturally going to hold onto that advantage as long as it can, especially as it economy cools.

But push will never come to shove on this issue, because that outcome serves neither side and only creates pathway dependencies that no one wants to navigate.

The business communities on both sides of the Pacific realize how our two economies are becoming mutually dependent. Does this mean war between us is impossible? No, silly rabbit. Nukes take care of that. What the economies do is make clear that all the brinksmanship BS short of war is also stupid and a waste of time, that's all.

In short, such tricks are for kids . . . and geostrategic "realists" who have their heads up their asses on global economics.

Are the Chinese right to complain about double standards? Yes, in many ways they are.

Here I simply quote the true reality well described in a thoughtful letter to the editor in today's Post

Instead of its trade surplus with the United States, economists agree, China's global surplus is a better test of its exchange-rate fairness. An unfairly cheap currency would result in a large global surplus. China's surplus with America is a quarter of the U.S. trade deficit, but the most widely accepted statistics show that China's global surplus accounts for only 8 percent of that deficit. Global surpluses from Japan, Germany and indeed the whole euro currency area account for more than 40 percent of the U.S. deficit. Including oil-exporting nations and the rest of Asia except China raises the combined global surplus to more than 75 percent of the U.S. deficit.

China can have a surplus with the United States while its global surplus is so small because of its large deficit with its neighbors. In recent years these neighbors have rerouted their exports to the United States through China for final assembly. Exports from the rest of Asia to the United States declined from 2000 to 2004 as reexports through China grew. China's much smaller global surplus indicates its exchange rate does not provide unfair advantage in trade.

A shift in China's exchange rate also is unlikely to alter the export-led growth strategies of the rest of Asia, which reflect not competition with China but their failure to stimulate domestic demand.

Neglecting to note these global and regional dimensions contributes to misguided protectionist threats against China.

How's that for getting the story right?