Speculation about an imminent revaluation of China's renminbi against the US dollar has reached fever pitch. An erroneous report on Wednesday on the English-language website of the People's Daily, the Communist party newspaper, did nothing to soothe traders' nerves, briefly weakening the dollar and boosting tradeable Asian currencies. Genuine pressures for revaluation also persist. Above all, with Congress in a protectionist mood, the US administration insists that Beijing should move immediately to a more flexible currency regime.

What should be done? The first priority is to eliminate the spurious arguments. US anguish over its bilateral trade deficit with China is not a good reason for a stronger renminbi. There is no reason for bilateral trade to balance. Equally, China's assertions that it cannot revalue under pressure, for fear of seeming weak in the face of foreign demands, do not justify maintaining the status quo if the economic arguments point to a currency shift.