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Volcker is realistic about China
Howard Richman, 3/25/2010

Former Federal Reserve Chairman Paul Volcker, now head of Obama's Economic Recovery Advisory Board, participated in the Wall Street Journal's Future of Finance Initiative. When asked about China, here's what he said:

I think the Chinese are a little disingenuous to say, ‘Now isn’t it so bad that we hold all these dollars.’ They hold all these dollars because they chose to buy the dollars, and they didn’t want to sell the dollars because they didn’t want to appreciate their currency. It was a very simple calculation on their part, so they shouldn’t come around blaming it all on us.

Sounds like Volcker understands what is going on. Maybe he'll be the first one in the Obama administration to figure out that the way you increase U.S. exports to China, is to apply an accross-the-board tariff on Chinese products proportional to the U.S. China trade deficit. The principle is really quite simple. Mercantilists maximize exports and minimize imports. You force them to change policies when you insist upon balanced trade.