China's currency, the renminbi, has been weakening in recent months, resurrecting familiar charges of manipulation, competitive devaluation, and beggar-thy-neighbor mercantilism. In mid-April, the US Treasury expressed "particularly serious concerns" over this development, underscoring what has long been one of the most contentious economic-policy issues between the United States and China.

This is a timeworn debate - politically inspired and grounded in bad economics - that does a serious disservice to both sides by diverting attention from far more important issues affecting the US-China economic relationship. Taken to its extreme, America's accusations risk pushing the world's two largest economies down the slippery slope of trade frictions, protectionism, or something even worse.

First, the facts: Since hitting its high watermark on January 14, the renminbi has depreciated by 3.4 percent relative to the US dollar through April 25. This follows a cumulative appreciation of 37 percent since July 21, 2005, when China dropped its dollar peg and shifted its currency regime to a so-called "managed float." Relative to where it started nearly nine years ago, the renminbi is still up 32.5 percent.

Over the same period, there has been a dramatic adjustment of China's international balance-of-payments position. The current-account surplus - the most telling symptom of an undervalued currency - has narrowed from a record 10.1 percent of GDP in 2007 to just 2.1 percent in 2013. The International Monetary Fund's latest forecast suggests that the surplus will hold at around 2 percent of GDP in 2014.

Seen against this background, US officials' handwringing over the recent modest reversal in the renminbi's exchange rate appears absurd. With China's external position much closer to balance, there is good reason to argue that the renminbi, having appreciated by nearly one-third since mid-2005, is now within a reasonable proximity of "fair value." The IMF conceded as much in its latest in-depth review of the Chinese economy, which calls the renminbi "moderately undervalued" by 5-10 percent. This stands in contrast to its earlier assessments of "substantial" undervaluation.

America's fixation on the renminbi is a classic case of political denial. With US workers remaining under intense pressure in terms of both job security and real wages, politicians have understandably been put on the spot. In response, they have fixated on the Chinese component of a long-gaping trade deficit, charging that currency manipulation is the culprit to the long festering woes of the American middle class.

This argument is politically expedient - but wrong. The US trade deficit is a multilateral imbalance with many countries - 102 in all - not a bilateral problem with China. It arises not from the alleged manipulation of the renminbi, but from the simple fact that America does not save.

Lacking in domestic savings and wanting to grow, the US must import surplus savings from abroad, and run massive current-account deficits to attract the foreign capital. And that leads to America's multilateral trade imbalance. Yes, trade with China is the largest component of this imbalance, but that largely reflects the complexity of multinational supply chains and the benefits of offshore efficiency solutions.