Last week, I wrote about signs of growing protectionism among a number of the G-20 countries, as documented in a report by the World Bank, “Trade Protection: Incipient but Worrisome Trends.”

Peter Morici, professor at the University of Maryland, took issue with the topic, noting that “these measures pale by comparison to Chinese protectionism, which contributed importantly to the (financial) crisis.” Morici was referring to the Chinese government’s manipulation of the country’s currency, the renminbi or yuan.

The Chinese government has a “50 percent subsidy on this export,” Morici says. As a result, exports from there are cheaper than they otherwise would be, hurting sales of American-made goods.

While it’s difficult to say exactly how the yuan would be valued if it was freely traded, many experts believe that its value would rise by ten to 40 percent, business correspondent Adam Davidson noted in a 2006 interview on NPR.

(According to the currency site, www.xe.com, one U.S. dollar currently buys about 6.8 juan.)

While the U.S. can’t force China to revalue the yuan, the government could impose a tax on currency conversions, in order to get to make it more fairly valued, Morici says. And, the tax likely would provide motivation for a policy change, he says.

Treasury Secretary Tim Geithner mentioned China’s monetary policy in his confirmation hearing. “President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency.”

However, not everyone agrees that getting the Chinese to revalue their currency would actually help the U.S. Writing in Foreign Policy, former currency trader Tibita Kaneene says, “there is little evidence that a currency appreciation would have an effect on the U.S. economy – let alone a positive one.” Instead, U.S. manufacturing – often seen as a victim of China’s currency policies – has lost jobs as technology has boosted workers’ productivity, Kaneene says. Moreover, China’s investment in U.S. debt keeps interest rates here low.

In any case, the debate over what to do about China may settle itself. By pegging the juan to the dollar, China is unable to use monetary policy to manage its economy, Kaneene writes. As the Chinese economy grows larger and less tied to the U.S’, this becomes more difficult. In addition, China limits its ability to invest in its own projects by holding such a large amount of U.S. securities. Eventually, China is likely to revalue its currency on its own.