In The Economist, Charlemagne discusses, among other things, China’s efforts to support the euro through visits to the PIIGS, expressions of concern and commitments to buy EFSF bonds. The Chinese do not want the euro to fall, goes the argument, because Europe is an important export market for China and a weaker euro would make Chinese exports more expensive there.

This struck me as a good example of the behaviour of the Chinese government. Europe needs a weaker euro in order to get through its current crisis — and thus maintain its healthy demand for Chinese exports. But Chinese leaders have no time for such subtleties. In their minds, weak euro = Chinese goods more expensive = bad. In a similar vein, what is the sensible course for the Chinese economy? To try, likely with increasing desperation, to prop up the euro on an ongoing basis; or to structure the economy in such a way that it is more robust in the face of the vicissitudes of the currency markets? I would have thought it was the latter, but there is no sign that that is what the Chinese are doing. In the game of international chess, China is aggressive in blocking obvious threats to its position; but it seems unable to think more than a move ahead.