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File these stories under “be careful what you wish for”:

Now even the World Bank has called for China to re-value the RMB. Moreover, there have been calls within the US to get tough with China on a number of fronts, e.g. label her a “currency manipulator”. Mish has an insightful post that discusses the effects of a possible Chinese re-valuation:

Let's consider the global shock effect of a sudden large revaluation of the Renminbi. The key is the RMB does not float. To get a 40% rise in valuation, China must buy or sell unlimited amounts of RMB against the dollar to maintain the desired price. That might mean a huge hike in Chinese interest rates to make holding the RMB attractive.
In turn, sharp interest rate hikes would likely cause a huge slowdown in China, decreasing China's demand for imports. This is yet another factor that Krugman and those crying "currency manipulator" miss.

And should the US impose a revaluation via tariffs, I would like to point out a little thing called Smoot-Hawley.

Over on the other side of the pond, Macro Man also mused on the comparisons between Germany and China:

Each, in their own way, has locked in an uber-competitive exchange rate with its major trading partners: Germany via EMU and China via serial piss-taking in currency markets. Each in their own way is acting hypocritically: neither wants their major customers to borrow profligately, but neither do they wish for them to quit buying.

His conclusion was the same as Martin Wolf in the FT: “the most feasible country to leave EMU is Germany itself.” So what would happen if the US were to leave the Chimerica marriage of convenience? Here is Macro Man [emphasis mine]:

However, unlike Greece, the US is not part of a formal de jure currency union, merely a de facto one. The implication is that with sufficient political will, the United States can extricate itself from the current arrangement. To be sure, there may be demerits associated with such a move: higher borrowing costs as China stops buying/sells Treasuries.

I return to the theme discussed in my previous post entitled Time bombs everywhere. Are America's political leaders willing to grit their collective teeth and choose the heart attack option by plunging the country and the world into a double-dip recession (or depression) now in return for the long term gain of the correction of global imbalances in savings and consumption?

Be careful what you wish for, you might just get it.

Source: Renminbi Revaluation: Be Careful What You Wish For