There is a Strategic and Economic Dialogue between the United States and China in Beijing starting Monday. So far we have seen the United States wimp out on truly confronting China on currency manipulation. Both Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner are attending.

Reuters:

U.S. and Chinese officials have stressed that the meeting in Beijing will not be dominated by the yuan.

There are some rumblings by Clinton on the economy:

"In the coming days, officials at the highest levels of our two governments will be discussing issues of economic balance and competition," Clinton said in a speech given in a vast hangar at Shanghai airport, referring to the Beijing meeting.

"Transparency in rule making and standard setting, non-discrimination, fair access to sales to private sector and government purchasers alike, the strong enforcement of intellectual property rights are all vitally important in the 21st century global economy," Clinton told the audience of U.S. and Chinese business executives.

"American companies want to compete in China," she said, standing in front of a Boeing 737. "They want to sell goods made by American workers to Chinese consumers with rising income and increasing demand."

Meanwhile CBS MarketWatch reports:

Chinese and U.S. officials have agreed, to the new basket-tracking framework for the yuan, but have yet to work out details such as the size of a potential one-off revaluation, as well as the pace of future gains, Lu said.

Chances of a one-off revaluation, such as the 2.1% rise when Beijing ended its formal peg to the U.S. dollar in July 2005, are unlikely this time, Lu said, although he didn't rule out the idea Beijing could agree to a small concessionary rise.

A basket of currencies? Is this China's agenda to remove the U.S. dollar as a reserve currency? About a year ago, this was a hot topic, so did we get this move with no announcement, indirectly, through Chinese currency re-evaluation?

Check out this op-ed, by Xie Xuren, the China Finance Minster:

A large portion of exports from American companies with direct investment in China has turned into China's trade surplus with the United States. But a significant part of China's trade surplus has become its investment in Treasury bonds and other dollar assets, shoring up the long-term stability of the U.S. economy. This economic relationship is one of mutual benefits.

Right, the two economies are beneficial, so don't mess with us on currency manipulation. We buy up your debt while selling you stuff that used to be made in the United States so you can continue to buy stuff even though we have your industries, jobs and income. Veiled threat by the Finance Minister?

Also, be aware the crash of the Euro is cutting into China's exports. Proof that China's currency manipulation does indeed affect trade balances and why China refuses to float their currency, currently estimated to be anywhere from 22% to 40% undervalued.