Chinese-US Trade War Will Be Blamed on Both

China and the U.S. have not been able to settle their conflict this weekend and continue along the road, heading for a frontal collision. Their battle concerns the enormous trade surpluses of China and the equally large shortages on the trade balance of the Americans. Should it come to a collision, it will be disastrous for the world economy.

Justly, the top man of the World Bank, Zoellick, warned of a recurrence of what happened in the 1930s. Then, the large countries tried to save their economies on the backs of other countries, which made everyone worse off. The consequence was a worldwide depression, which brought the Nazis to power in Germany.

This weekend, a top meeting of the International Monetary Fund (IMF) took place in Washington. There, not much more was accomplished than that the fund will from now on fulfill a coordinating role concerning exchange rates.

That China exports so much not only has do with the diligence of Chinese citizens, but also with the exchange rate of the Chinese currency, which is held artificially low. That way, Chinese exports remain cheap and China can, because of the rapid economic growth, create jobs for its tens of millions of poor farmers who migrate to the cities.

Keeping your currency artificially low is a well-known trick to stimulate one’s own economy. It is understandable that the United States, Europe, Latin America and other Asian countries criticize China for its egoistic exchange rate policy. Since this spring, Beijing let its own currency rise slightly but a realistic exchange rate is far out of the question.

But China is not the only one to blame. The Americans not only import that much because Chinese goods are so cheap, but Americans also make hallucinatory debts. Every time that the moment of pay-off seems to have dawned, the Americans react with new measures that do not solve the problem but postpone it. Interest rates of almost zero and a mint that is always producing and overstocks the world with dollars — everything is pulled out of the closet to boost the American economy.

The euro zone is more stable. It knows a reasonable balance between import and export and a monetary policy that maintains more distance to the casino than its American colleagues. But if China and the U.S. want to collide, Europe will suffer.