How much will taxpayers shoulder?

[Zenda]

"According to the IMF, the observed path of the exchange rate and reserve build up, coupled with information regarding intervention, suggest that the exchange rate was mainly determined by official action, prompting this [crawling peg] classification."

The IMF apparantly labeled China's currency policy as 'crawling peg'. The WTO and US Treasury Department call it a 'managed float'. I'm not quite sure, but that seems to be the same thing. Noone denied this, and China isn't the only country with a 'managed float'.

"While China has relaxed some capital market controls (see below), by and large, the RMB is not traded freely internationally."

Looks to me as if there are forces working against China's efforts. That's not surprising, in a world economy that is based on speculation. Every tendency will be countered if it goes too far or too fast.

"While any assessment of whether a currency is undervalued (and the extent of such undervaluation) is fraught with analytical difficulties, the lack of flexibility of the exchange rate and its alleged undervaluation is seen by some as providing an advantage to China's exports."

The first half of this sentence basically says what I have been saying, which is that you shouldn't tie too much conclusions to some apparant currency undervaluation. The second half acknowledges that some people don't follow that advice.

"Nonetheless, there remains the immediate issue concerning the ability of monetary policy to combat rising inflation. In this regard, a more flexible exchange rate regime could enable China to operate a more independent monetary policy, which would be better suited to ensuring a low and stable rate of inflation, and therefore contribute to a macroeconomic environment more conducive to sustained strong economic growth. A more flexible exchange rate and thus more independent monetary policy would complement structural reforms, especially those concerning the capital market, and obviate the need for price controls and other non-market measures to contain inflation. There are signs that China's exchange rate regime has become more flexible recently; in January 2008, the renminbi appreciated nearly 1.6% in relation to the U.S. dollar, the largest monthly increase since the July 2005 reform of the foreign exchange regime."

Here, the WTO states that more flexible counter-inflation methods would give China several economic benefits. Judging by recent results, the Chinese listened well to this advice. That seems to be the opposite of what you see in it, that the Chinese government is holding their currency down to gain benefit.

but note the backhand: that their exchange rate has improved recently means that it was in a position in need of reform beforehand.

So, improvement is always bad because it means things were worse before?

I think your read of the WTO document is wrong

You got a different interpretation of "complimented China", "expressed their appreciation", "commended China's" and "impressive example"?

You quoted the Treasury Department above, and as I pointed out then, your reading of it was at best selective, at worst completely backwards.

Then Reuters must have made the same mistakes, when they used a headline like U.S. Treasury says China not manipulating currency

... and if you think, for one split second, that I believe the standards of fairness in the world are to be determined somehow relative to the baseline of the United States' actions, then I'm afraid you really need to go back to what I've written about the Iraq war and other such topics.

If this is about my remark on starting wars, then you failed to see it was not about what you believe, but about the unfairness of the harsh reality out there.