But assume that China does revalue its currency sharply, by, say, 40 .

CAMBRIDGE For several years, American officials have pressed China to revalue its currency.

The only thing that they agreed on was to admonish China to revalue its currency.

Instead, the US has brought intense pressure to bear on China to revalue the renminbi.

The Chinese, insists a broad coalition of politicians, business leaders, and academic economists, must revalue or face sanctions.

When asset prices move, firms that own these assets are forced to revalue them on their balance sheets quarter by quarter.

If China responds to entreaties to revalue the yuan, it may need to look tough on other issues to appease nationalist sentiment.

But, based on Japan s experience, the Chinese do seem to have good reasons to be wary of US pressure to revalue the renminbi.

The transformation in China s banking system, coupled with the recent decision to revalue China s currency, will require major changes in the conduct of monetary policy.

China has been criticized in the past for allegedly manipulating its exchange rate, because it did not revalue its currency as much as the US demanded.

After all, as the Chinese leadership knows, only continued strong growth will provide the government with the wriggle room it needs to begin to revalue the renminbi.

Thus, China bashing primarily means pressure to revalue the yuan. However, this demand is as unwarranted now as was pressure on Japan to make the yen appreciate.

Instead, the US has brought intense pressure to bear on China to revalue the renminbi. The result is a war of words that could easily turn into something worse.

China will come under pressure to revalue its currency (now being held at artificially low levels) so that Chinese exports are more expensive and imports from others (including the US) cheaper.

By relenting just a little to intense global pressure to revalue its exchange rate, the Chinese leadership has masterfully stifled the growing chorus of demands to rein in its growing trade surplus.

NEW YORK So far, discussions about whether or not China should revalue its currency, the renminbi, have focused almost exclusively on the impact of the currency s exchange rate on China s trade balance.

There were many reasons for this, but foremost among them was that China had already amassed more than 100 billion in reserves, and refused to revalue its currency, when the crisis hit.

As the US pushes China to revalue the renminbi, American economists try to support the case for a stronger renminbi by looking at examples of surplus countries that adjusted by carrying out more expansionary policies.

Were China to revalue its currency, its farmers would be worse off but in a world of free(r) trade, US farm subsidies translate into lower global agricultural prices, and thus lower prices for Chinese farmers.

So then what? The historical evidence from the 1970 s and 1980 s, when the US consistently pressed Japan to revalue the yen, suggests that US politicians would most likely demand that the renminbi appreciate even more.

NEW YORK The visit on January 19 of China s president, Hu Jintao, is coming at a time when economic conflict between the United States and China has become one of the most worrying global developments. Throughout last year, the US pressed China to revalue the renminbi, while China blamed the US Federal Reserve policy of quantitative easing for currency market turmoil.