The original text contained potentially inflammatory references to the “subsidy” provided to China's booming export industries by an undervalued renminbi. When he actually spoke, however, Mr Bernanke mysteriously softened his line, talking of a “distortion” instead. The Fed said his change of words was “spontaneous” – a remarkable claim to make about a central banker.
The overall message, however, was still critical, if constructively so. It also touched on China's excessive investment in steel and insatiable appetite for energy supplies. Whatever Mr Bernanke's final choice of words, protectionists in the US will seize upon his speech – especially since the original text remains posted on the Fed's website.
Earlier this week, just prior to US Treasury secretary Hank Paulson's arrival in China, the renminbi hit a fresh high against the dollar. But it has risen by just 5.4 per cent since the peg was loosened in July 2005. Beijing perhaps fears the impact of faster appreciation on its heavy industries – and, by extension, the domestic banks that lend to them and and the millions employed by them. In the final paragraph of his speech, Mr Bernanke – clearly – called on his own country to resist protectionism. But with a major change in China's position unlikely, he may be ignored
