One businessman’s vantage point explains more eloquently than words why Barack Obama ran straight into a Great Wall last week when he tried to persuade China to let its currency rise.

From his office window overlooking the container port of Ningbo, near Shanghai, Huang Ping watched the collapse of Chinese exports as cranes stood motionless and only a few ships set out to sea.

Now he is watching the recovery gathering pace before his eyes. “There was hardly any traffic,” the technology manager recalled, “and then suddenly from the beginning of June it began to pick up.”

So while the Obama retinue called for a stronger yuan and tossed round phrases like “10% growth in China equals 10% unemployment in America”, their hosts were unmoved. They know how close they had come to disaster.

Nine months ago, things were so dire in Ningbo that a kind of silent panic gripped the city, which had prospered as a hub for low-cost exports of everything from toys to electronics and clothes. About a fifth of exporters in the surrounding province, Zhejiang, went out of business.

“It seemed like the end of the world was nigh and nobody dared spend any money,” said a transport operator. “All people could talk about was who had gone bankrupt and who had fled.”

Up and down the tradedependent eastern coast of China, there is an air of cautious confidence that the Chinese export machine has survived its worst shock since the country rejoined the ranks of global traders in the 1970s.

The government has reported that growth rose to 8.9% in the third quarter, compared with 3.5% in America.

A tidal wave of liquidity has washed through the economy from government stimulus spending and state-ordained bank loans.

There are fears among economists, though, that it is merely inflating asset bubbles in the stock and real estate markets. But for the moment all the talk at the docksides and autumn trade fairs reflects pure relief.

That explains why China’s leaders stonewalled American pleas to let the yuan rise when Obama made his first visit to Beijing last week.

Many Chinese executives believe their government saved its export industries from collapse in the summer of 2008, when it, in effect, re-pegged the yuan at about 6.8 to the US dollar. That handed China a competitive export advantage against the yen, euro and most other important trading currencies.

It ended a period since 2005 when the Chinese currency had risen by more than 20% against the greenback.

In the view of the Nobel economics laureate Robert Mundell, the weak dollar plus the US Federal Reserve’s rate cuts have therefore underwritten the Chinese economic recovery.

So China has little incentive to change its stance. Indeed, after Obama left empty-handed, the governor of the central bank, Zhou Xiaochuan, dismissed the exchange-rate issue and said China was a mere spectator to the dollar’s decline — “We just watch the game,” he said.

Chinese intransigence is stoking bipartisan frustration in Washington.

Democratic Senator Charles Schumer called China “mercantilist” and the Kansas Republican Sam Brownback bluntly called on Obama to “do something”.

Morgan Stanley’s Stephen Roach now sees tensions over the dollar and the Chinese currency emerging as the biggest risk to the global recovery because they point to “a more explosive clash” on trade.

There are signs of incremental compromise. Foreign exchange traders are speculating that the People’s Bank of China might allow the yuan to appreciate fractionally and some forecast it could gain 2.8% over the next 12 months.

Too little, too slowly, American critics would say. In the meantime, Chinese exporters are reaping the benefits of competitive devaluation.

Businessmen at the October Canton Fair, a critical measure of overseas trade for China, placed orders worth £18.4 billion, the Ministry of Commerce said last week.

That was more than 16% up on the same fair six months ago. Newspapers in Ningbo, a key export zone, reported that local firms garnered £315m in orders at the event.

Headlines in the city’s evening newspaper trumpeted the claim that 1,600 manufacturing firms had opened for business in the past three months.

“I believe China’s trade is now recovering slowly,” said an official at the Ningbo customs statistics office, who asked not to be named.

He said throughput at the port in the first three quarters had gone up 2.01% on last year to 279m tons, a small but significant increase.

However, Chinese officials are not going to risk anything yet. “Until there’s a noticeable improvement in exports, the exchange rate will not see a major adjustment,” said Jiang Jianjun, a foreign trade official with the Ministry of Commerce.

Jiang predicted to an economic forum in Beijing that it would take two to three years for China’s combined imports and exports to regain the levels attained before the global financial crisis.

Such a forecast indicates a slow recovery for world trade and it raises the big economic unknown that haunts Chinese policymakers — what happens when the stimulus money runs out?

There has never been so much money poured into the Chinese economy in all its long history — some £355 billion in state spending and billions more in bank loans since January 1.

Some of the spending has gone into valuable infrastructure, such as high-speed railways, or to foster green technology and pollution clean-ups.

To most ordinary Chinese citizens, however, it looks as if officials and state-owned firms simply rushed to invest funds at their disposal in the stock market and in real estate.

Both asset classes have surged in value — the Shanghai Composite index is up over 80% this year — prompting warnings from observers like Andy Xie, an independent economist, of a new bubble economy.

Xie argues that the yuan is not fundamentally undervalued and that the authorities are playing a risky game that could see the Chinese economy collapse once the US revives and the Federal Reserve’s interest rate is above 5%. He said revaluing the yuan, as Americans demand, would be a disaster.

At its most conspicuous and egregious, the flood of cash has led to record price levels for luxury homes in Hong Kong as wealthy Chinese buyers turned up in large numbers at the city’s no-questions-asked property estate agents over the sweltering summer months.

Meanwhile, Chinese consumer spending remains suppressed by low wages and a fragile social security system that forces ordinary families to save.

“The problem in China is not the exchange rate,” said another Shanghai analyst, “it’s injustice. Wages need to rise.”

If Chinese leaders think that they can evade reform by going back to the old growth formula, then they are mistaken, warned Liu Yehui, director of financial research at a state think tank.

He argues that the old cheap goods-cheap currency policy subsidises foreign consumers and fosters over-reliance on exports when China really needs to encourage domestic consumption.

That is the very argument that President Obama and his advisers were striving to make in Beijing. From the vantage point of Huang Ping’s window overlooking a busy harbour, it seems a weak one.

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