It is ever more apparent that it would be in China's domestic interests to allow an upward adjustment in the currency. By reducing the cost of imports, it would take the pressure off inflation and also in time help to reduce the country's dependence on exports for growth. Yet China won't do it under threat of trade retaliation while for many in America, small annual adjustments in the currency are not good enough. I'm not suggesting China must always be humoured and appeased in the hope it eventually comes around to Western ways of thinking.