Specialists at Morgan Stanley Asia believe that threatening China with trade sanctions is now “particularly dangerous” as the United States depends increasingly on its third-largest export market to help recover from the worst recession in 7 decades. In their view, US policy makers have to put up with the fact that China is unlikely to speed up revaluation of its currency more than the pace since 2005.

President Barack Obama has set a target of doubling exports within 5 years to help drive growth that, insists Morgan Stanley, can’t be done that without China. As long as China remains on a path for gradual currency appreciation, everything will be fine, believes the bank.

Yesterday President Obama and President Hu Jintao of China met for the eighth time. They claimed that the 2 countries can keep fostering commercial ties while working through differences on currency policy and human rights. However, that didn’t stop Obama from criticizing China’s approach to yuan’s rate, blamed by his administration and lawmakers for making American exports too expensive.

Chinese authorities, in their turn, try to the country away from its export-led growth model toward relying more on consumer spending that means the necessity to stem high inflation. The country’s CPI rose by 4.6% in December on the annual basis after it had added 5.1% in November.

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