First, "Do not let the yuan's exchange rate issue become the scapegoat of U.S. domestic economic problems, including their unemployment," said a Chinese Ministry of Commerce spokesperson.

Sounds like a common political strategy to me: if you can’t defend your reasons for doing something (specifically the consequences of such actions), then just go on the offensive and deflect.

From the Financial Times yesterday ...

"Although putting the renminbi on the back-burner serves the interests of both Washington and Beijing, the world's response to the debate suggests the dangers of such brinksmanship. America received almost no support for its tough stance, save for some mild words of rebuke from Dominique Strauss-Kahn, the managing director of the International Monetary Fund, and a soft joint letter of protest from five leaders of the Group of 20. There was a deafening silence from Japan and South Korea, both of which have massive investments in China. Their most powerful companies' profits are linked to China's export success, which a stronger renminbi would undermine.

China's dilemma is that, like Bismarck's Germany, it surpasses in power all its neighbours combined (save for Russia with respect to its nuclear arsenal). To avoid the fate of the Second Reich, China must recognise and publicly accept that it is no longer a developing country but a global power with responsibilities that extend beyond its immediate national interests. It will need to explain its actions and factor other countries' interests into its policies.

The dispute over the renminbi is a wake-up call for Beijing. But pulling back from the brink with the US is not enough. Nor can China rely on Asia's "great chain of production" providing it with a secure and stable region. As with the Asian crisis of 1997, when China shunned beggar-thy-neighbour currency policies, what is needed above all is a commitment to neighbourly multilateralism."

Ok, I’ll stop there.

A bit of sweet data out of China – year-over-year growth sped to 11.9% for the first quarter while March revealed China’s first monthly trade deficit since the 2004.

Click on image to enlarge!

What’s interesting is that the Chinese Ministry of Commerce guy I quoted above seems a bit disturbed by China’s small trade deficit in March, specifically the export side. He notes that Chinese domestic demand is outpacing the global recovery. I mean, how many analysts and economists made it clear that the Chinese consumer needed to play a bigger role, that there was nothing wrong with China running some trade deficits. After all, isn’t the latest measure of growth sitting at 11.9%?

Still, China seems hung up on exports. But why?

Maybe they simply don’t want to buy more from the US than they sell to the US ... for the sole reason that it is the US.

Click on image to enlarge!

It shouldn’t be surprising that things are getting personal; China is out for world domination. The political views there certainly haven’t aligned with those in the US and many other places in the world. But China has taken steps to see that their economy is more aligned with global dealings.

Their economy holds the key in overtaking the United States’ status as world superpower. It shouldn’t be surprising if things start to get personal. We in the US are learning first-hand what it’s like when politicians implement a personal agenda.

Then again, maybe I’m just getting too personal.

For now, the risks seem to be on the back-burner. US stocks had a big day yesterday, so they may need to take it easy today. But I’d guess that the markets take kindly to this data out of China.

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