People like Sen. Schumer make it ALL sound so simple. Let the renminbi appreciate and the world's economic problems will be solved, and unemployment in America will fall. Yet, if you would stop and think about it, this is a distinctly implausible claim. The idea that an adjustment in one relative price in the entire global economy will rid the world of imbalances and lead to a new economic nirvana doesn't really make sense. When the Japanese tried to do in the late-1980s exactly what is now being asked of China (shift away from export-led to a domestic demand-led growth) it all ended in tears.
It is wrong to insist that China’s global rebalancing imperatives should be addressed by a realignment in a bi-lateral exchange rate with the dollar. What matters most insofar as global imbalances are concerned is China’s broad multilateral exchange rate. On that basis, China can hardly be accused of manipulation vis-a-vis the rest of the world. In real terms, the trade-weighted renminbi is up 7.5% over the past six months and fully 20% over the past five years.

Without a fix to America’s saving problem (highly unlikely in an era of trillion dollar federal budget deficits) forcing the Chinese to appreciate the RMB versus the dollar, or imposing trade sanctions on them if they don’t, is like rearranging deck chairs on the Titanic. It would only shift the Chinese piece of the US trade deficit to someone else — most likely to a higher cost producer. That would be the functional equivalent of imposing a tax hike on already hard-pressed middle class workers. Washington needs to rethink a flawed strategy of attempting to fix America’s multilateral international imbalance through a bi-lateral currency adjustment. It is bad politics driving bad economics....  Stephen Roach, Chairman of Morgan Stanley Asia

China was cut off from the rest of the world for nearly 500 years. The very day that it began opening up, the world's available workforce was essentially doubled. Let me say that again "The world’s available workforce DOUBLED". It basically flooded the world with workers who are prepared to accept wages a tiny fraction of those being paid in the West. Western powers knew this when they approved China's entry into the WTO.... Big corporations not only knew this, but lobbied heavily for it. Why? Because they were drooling over the possibility of employing these low-cost workers in their factories - which is exactly (EXACTLY) what has happened.
All during most of the 20th century, Western workers enjoyed a "monopoly" on access to global capital, rewarding themselves with wages well above the market-clearing price.
That's now beginning to change. Nominal exchange rate adjustment won't prevent Chinese workers from undercutting their Western equivalents. To think otherwise, is unwise....

My advice is to leave China alone. They have navigated high and low seas with admirable dexterity. Instead, all of these pols and their elitist economist's should strain to find ways to redirect the declining fiscal firepower of the west to reactivate domestic credit. Domestic credit is the major channel for ensuring that the necessary fiscal adjustment does not end up in even more tears.