European rhetoric aimed at China is becoming American in style: confrontational and shrill. Trade deficits and exchange rates are the lightning-rods. European Union threats of retaliation have become more frequent.

This new China-bashing is muddle-headed and dangerous. On deficits and exchange rates, the EU’s diagnosis is nonsense. It is true the EU’s trade deficit with China is soaring, hitting $166.4bn in 2006. While that is still smaller than the US-China trade deficit, it has grown much faster. The Chinese renminbi has depreciated about 25 per cent against the euro since 2000, while it has appreciated about 10 per cent against the dollar.