China is increasingly the focal point of American policymakers and strategic analysts. Despite former secretary of state Colin Powell’s rather upbeat assessment last summer of the bilateral relationship between the two countries as being the best since president Richard Nixon’s 1972 visit to China, the second George W Bush administration is constantly echoing congressional sentiments about the China problem, despite its avowed commitment to maintain a candid, cooperative and constructive relationship with Asia’s rising power.
As seen in Washington, the China problem is manifested in several areas in which the two countries are increasingly at odds. Leading the pack is what US policymakers consider to be Beijing’s deliberate attempt to keep the Chinese currency undervalued. Pegged to the US dollar since 1994, the undervalued yuan is blamed as an important contributor to America’s economic ills: growing trade deficits and the loss of jobs.