Is China a currency manipulator?

Once upon a time, there were two countries, one named the US of A and the other named China. US of A bought Chinese goods cheaply for several years, by simply printing more of their money. China scrounged and worked hard, to be able to provide acceptable quality at very, very cheap dollar prices. US of A benefited hugely from a low priced yuan - it gave them more goods and value per dollar of spending. In the meanwhile, China saved, and saved, and saved. In US of A's dollars. So the US of A was the grasshopper that danced all summer, and China was the ant that saved up for the winter, from Aesop's fable.

China's thriftiness allowed the US of A to spend in excess of their incomes, and not bear the consequences, because, by buying up US of A's treasury bonds, China in effect sequestered the extra dollars printed in the US of A that could have led to inflation at home.

Now, US of A finds that they have reached the limit of deficit financing, and its cupboards are as empty as Old Mother Hubbard's was. They have suddenly realised that they have to repay all the Treasury Bonds that China has accumulated. They want to pay back the debts after China has appreciated the yuan, so that they will pay less dollars to pay off their debts. So they decide that China has to allow the yuan to appreciate against the dollar.

But China now has new-found confidence - the confidence of the rich ant, with a granary replete and bulging on all sides with dollar debts issued by the US of A. So it looks the US of A in the eye and says, "Please manage your own currency, we will manage ours." When pressed, the Chinese will point out that they have never lectured the US of A on what to do with their currency even when they were buying Chinese manufactured goods at a small fraction of what it would cost them to manufacture and sell, so why should China listen to lectures now?

So now, the US of A is doing the equivalent of the grasshopper in W Somerset Maugham's version - marry a rich widow and escape the consequences of past profligacy, by alleging that China is a currency manipulator, and forcing China to value its currency upwards. If China gives in, then they have been hit twice - once by being forced to sell goods cheaply with an undervalued currency; and once again when it is time for them to reap the benefits of investing their savings in US of A's Treasury bonds.  

Which version of "The Ant and the Grasshopper" will triumph - Aesop's, or Maugham's? The jury is out. I certainly hope that Maugham's cynical and dishonest grasshopper does not triumph. In this case, currently, it is worse: China's currency has risen, and yet they are being branded currency manipulators.