For China, the economic crisis is over. After more than a year of decline amid the global recession, the country's exports are growing again. In December, they were up almost 20 per cent on 2008. The European Union's exports are still 20 per cent down.
Given this contrast, China's good news will trigger a fresh wave of attacks on Beijing's exchange-rate policies. Having kept the national currency cheap for years by buying hundreds of billions of US dollars with freshly printed yuan, China has maintained an unbeatable price advantage for its exporters.
The dire state of the domestic labour market will pave the way for a new round of China-bashing in the US. There is a growing feeling that China is delivering consumer goods that could just as well be produced by unemployed American workers. During the 2001 recession, the US Congress debated placing a whopping 27.5 per cent punitive tariff on Chinese goods, should Beijing continue to resist appreciation. Now, with unemployment at 10 per cent, the pain for US workers is much worse. It is only a matter of time before Washington acts.
However, Beijing is unlikely to budge any time soon. Although the government is eager to avoid trade conflicts with the rest of the world, one objective takes priority above all others - preventing social unrest at home. As any major rise in the yuan puts workers in the export sector at risk of losing their jobs, Beijing will only allow the currency to appreciate very slowly.
Sebastian Dullien is a professor of economics at the University of Applied Sciences, Berlin