Now assume that the renminbi appreciates only moderately so that China continues to export to the US at higher prices but lower profits. This would push up inflation rates significantly, forcing the US Federal Reserve to tighten monetary policy and possibly undermining the US' recovery, which still remains shaky. New difficulties in the US and China, the world's two largest economies, would have a negative impact on global investor confidence, hurting US employment even further.

In both scenarios, US employment numbers would not rise and the trade deficit would not diminish. So then what? The historical evidence from the 1970s and 1980s, when the US consistently pressed Japan to revalue the yen, suggests that US politicians would most likely demand that the renminbi appreciate even more.

The exchange rate measures the relationship between at least two currencies, whose values are based on the productivity and domestic balance of their respective national economies. Causes for misalignment may be found on both sides. If the US dollar needs to devalue because of fundamental problems in the US economy, the problems cannot be fixed by lowering the dollar's value alone.

Of course, there are problems with China's external imbalance with the US, such as excessive national savings (which account for 51 percent of China's GDP) and distortions in the prices of energy and other resources. All those problems contribute to the imbalance and China should fix them.

But we should realize that there are fundamental causes for the imbalance on the US side as well, such as over-consumption financed by excessive leverage and high budget deficits. Only when both sides make serious efforts to fix their domestic fundamentals will the imbalances be reduced in a serious and sustained way. Short-run exchange-rate adjustments cannot simply fix negative long-term trends.

China may resume a "managed float" of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes. In choosing whether or not to do so, its policymakers may weigh factors ranging from China's international responsibilities to the potential damage of foreign protectionism or even a trade war. What is certain, however, is that China's politicians have a domestic agenda just like the Americans. The key element of that agenda is to maintain employment growth.

One-third of China's labor force remains in agriculture, earning only about half of what migrant workers in China's booming cities make. (Per-capita earnings for China's farmers may rise to $770 if the renminbi appreciates by 10 percent, but of course that is only a US dollar-term revision, with Chinese farmers feeling no increase at all). Getting more farmers into better-paid manufacturing and service-industry jobs will mean not only a reduction in poverty, but lower income disparity. By any moral standard, that goal is at least as important as anything on America's agenda.

The author is professor of economics at Beijing University and the Chinese Academy of Social Sciences, and director of China's National Economic Research Institute.