The President of China, Hu Jintao, said that "the current international currency system is the product of the past” Monday, continuing the currency war that the country has with the United States over the value of the yuan versus the dollar. The question is particularly important, as United States has a $227 billion trade deficit with China.

The Financial Times reports that

His unusually blunt comments on the US-led monetary system as a “product of the past” is confirmation that China will continue to take measures to internationalise its own currency, the renminbi.

The Wall Street Journal, meanwhile, reports that China blames the currency tension between the two countries on the American Fed, while the U.S. blames the undervaluation of the yuan

Mr. Hu's veiled criticism of the Fed reflects widespread feelings among developing nations that U.S. interest-rate policy is devaluing the dollar, prompting flows of capital overseas and creating inflation elsewhere. China and other developing countries would like the Fed to factor in those consequences when it makes decisions. Fed officials counter that their mandate is to bolster the U.S. economy and that a stronger U.S. economy is in the interests of China and other countries, which depend heavily on trade and investment from the U.S.

This could be a major issue of contention between Messrs. Hu and Obama. The U.S. blames Chinese currency undervaluation—not Fed policy making—for worsening competitive and inflation problems overseas.

Hu Jintao's remarks came one day in advance of his presidential visit to Washington, D.C. Tuesday.

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