Michael Collins is an investment commentator with Fidelity Worldwide Investment.

US Republican presumptive presidential nominee Mitt Romney has already declared what he will do on his first day in power - declare China a currency manipulator.

He first stated this intent last year when the US Senate passed a Democrat-sponsored bill aimed at China that would allow the US to slap tariffs on goods from any country with a "fundamentally misaligned" currency.

China's currency is a regular target of US politicians because Beijing's low-yuan policy is vilified as the cause of many of the US' economic problems. It is blamed for shifting an estimated 6 million jobs out of the US and for the US' trade deficit with China, which reached US$295 billion (A$275 billion) last year.

The low yuan helped China create the large current-account surpluses that enabled it to be the world's biggest holder of US debt, a fact that makes the US feel vulnerable. As Hillary Clinton once asked Kevin Rudd when he was prime minister: "How do you deal toughly with your banker?"

Whatever the correct way is for the US to deal with China and the anti-China sentiment within the US, targeting China over the yuan is an economically pointless and potentially counterproductive strategy.

The strategy is risky because China is likely to retaliate against any US steps to punish it for an undervalued yuan.

These steps include the passing in March of a bill that restores the right to impose tariffs on subsidies or dumped imports and the decision the same month with Japan and the EU [European Union] to take China to the World Trade Organisation to loosen its control over the rare-earth materials used in tech products.

Ironically, here the US and others are complaining about a Chinese export restrictions.

The world doesn't need any more trade and currency friction when it is still emerging from the global financial crisis. Any US steps to impose broad-based tariffs on Chinese imports could help push the world towards 1930s-style trade wars that wrecked the global economy.

The US is hardly innocent when it comes to influencing its currency anyway. Many countries, from Brazil to Japan to Switzerland, are manipulating their currencies these days (which is not against WTO rules) because they say the Federal Reserve's expansion of the US monetary supply is undermining the US dollar.

Why bother?

The economic pointlessness of targeting China's low-yuan policy is obvious, even allowing for the political calculation that China doesn't react well to pressure.

First, manufacturing jobs in China are unlikely to return to the US just because a higher yuan or tariffs make Chinese exports less competitive. A higher yuan will just as likely force factory owners in China to relocate to other Asian countries where labour is cheaper, rather than to the US.

Companies are already shifting jobs from China to Bangladesh, Cambodia, India, Pakistan and Vietnam because costs in China, especially wages, are mounting.

China's Ministry of Human Resources and Social Security said 21 regions in China (including Beijing) in the first nine months of 2011 raised minimum wages by an average 22 per cent.

Also, the difference in productivity between the US and China - in the US, factories rely on machines while China's depend on people - means that even if jobs did return to the US from China, the number of new jobs in the US would be far fewer than the number of jobs lost in China.