As Hu Jintao and President Obama gather in Washington for their summit meeting, it is a good time to take another look at U.S.-Chinese economic relations. China has become the lightning rod for Americans on the left and right who find an obstacle to the U.S. recovery from its economic woes. From Niall Ferguson on the right to Bernie Sanders on the left and to many the politicians and economists in the middle, the problem with China is that its high rate of saving and its undervalued exchange rate have resulted in high unemployment in the US and brought about an unsustainable American trade deficit. Some economists have even argued that this deficit was a major cause of the economic crisis in the first place.

There are at least three problems with the prevailing view.

The first problem is that renminbi revaluation is not likely to help much in reducing the U.S. trade deficit. For one thing, U.S. importers in the major deficit industries (apparel, electronics, toys) will simply shift to other low-cost countries, and Chinese imports from the U.S. are not particularly price sensitive. Second, appreciation of the Chinese currency will lead U.S. corporate profits to suffer due to higher costs for imported inputs.

These limits of the policy effectiveness of renminbi revaluation are well known but largely ignored in the popular debate. Presidents Bush and Obama both spoke out loudly on the need for currency adjustment, but neither of them ever pushed hard in negotiations with the Chinese. It should be no surprise that the Obama administration revealed that this week it is going to back off on the currency question and focus instead on intellectual property rights infringement. There is simply too much disagreement within the U.S. business community on the issue.

The second problem is that excessive Chinese saving is not the entire story behind the U.S.- China imbalance. Low levels of U.S. household saving, and U.S. business strategies have also contributed. Household borrowing is clearly going through an adjustment, as home foreclosures continue at record levels and . . .

Read more: America’s China Problem: Another View