The new Cold War?

In his recent cover story for The Spectator, the Financial Times’ Gideon Rachman talked about how, in the United States, China was beginning to take on the appearance of a new Cold War-style foe.

Many Americans accuse China of stealing US jobs, of keeping the its currency undervalued, of exporting deflation by selling its products abroad at unfair prices, and of failing to meet its commitments to the World Trade Organisation. Two months ago, a poll from WSJ/CNBC showed that the majority of Tea Party activists oppose free trade – seeing China as the sole beneficiary of a free trade policy.

But it is not only the Tea Party that is goading for a US-Chinese clash.

In a comment piece for the New York Times, entitled “Taking on China”, economist Paul Krugman took on the currency issue. “Diplomacy on China’s currency has gone nowhere, and will continue going nowhere unless backed by the threat of retaliation,” he wrote.