Back in 1971 John Connolly, then US Treasury secretary, told his European counterparts that the dollar was “our currency, but your problem”. Today, it seems that China has returned that favour. Its currency has become a problem for the US. Tim Geithner, the current Treasury secretary, has a damned-if-I-do-damned-if-I-don't choice facing him in mid-April, when he is required to pronounce on whether China is a currency manipulator.

Branding China a currency manipulator would be explosive. Beijing would not take kindly to being chastised formally. It is likely to respond in kind, and it is safe to assume that changing its currency policy will not be part of that response. Yet ducking the issue also carries costs. Letting China off the hook for egregious currency action at this time would be an abdication of responsibility, a signal of weakness from the world's still-greatest power.

Is there a way out? There is, as Aaditya Mattoo of the World Bank and I have proposed. The key is to recognise that the renminbi is a problem not just for the US but the world and, as such, requires a multilateral rules-based solution rather than a bilateral confrontation between Washington and Beijing.