After more than a year of skirmishing, China's high command seems to have given up hope of a rapprochement. By refusing to defend the renminbi from further devaluation, it has essentially declared all-out economic war on President Donald Trump's America. But tempting though it is to assign the lion's share of the blame to Trump, it's not that simple. If China continues to allow its currency to devalue, the consequences for almost everyone, including Europe, are likely to be extraordinarily damaging.

First, what of the charge of "currency manipulation" that Trump has levelled against China? This was once true enough; for decades, China held down the value of its currency, accumulating vast foreign exchange reserves and giving itself an unfair competitive advantage in global markets. The position it enjoys today as the world's biggest manufacturing powerhouse was acquired through years of mercantilist currency suppression.

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