The votes are an unsettling reminder of the angst lurking below the surface of a country burdened by huge unemployment. And now, with the US trying to revive its manufacturing sector, the shadow of a trade war between China and the US looms ever larger.

Immediately following the Senate votes in early October, three Chinese agencies — the Foreign Ministry, the Central Bank and the Ministry of Commerce — responded to these actions, claiming they could spark a trade war. In response to the strong Chinese reaction, the US has launched a seemingly concerted attack on the Chinese renminbi. Ben Bernanke, chairman of the US Federal Reserve, said in a testimony to the Joint Economic Committee (JEC) that, ‘Right now, a concern is that the Chinese currency policy is blocking what might be a more normal recovery process in the global economy’, and: ‘It is to some extent hurting the recovery’. Soon after came President Obama’s public criticism of China. At a White House news conference, he said: ‘China has been very aggressive in gaming the trading system to its advantage’, and: ‘It is indisputable that they intervene heavily in the currency markets’. He did, however, caution against the Senate bill.

New York Democrat Senator Charles E Schumer, author of the currency bill, has not this time been alone. Senator Lindsey Graham, the South Carolina Republican, started similar moves against the Chinese yuan in the Senate in 2005. In the following six years, their proposals had failed. However last week, the Senate finally voted to pass their proposed legislation.

The high-profile bill, combined with Obama and Bernanke’s criticism of the yuan, delivers an important message to China. As Senator Charles E. Schumer said, the actions constitute ‘a message to China that the jig is finally up’. Significantly, he thundered: ‘We’re already in a trade war’.

Is the bill just about grandstanding like many other bills before it? Most likely not. From an economic perspective, passing such a bill is not a sound solution to the problem of imbalances between China and the US and is likely to be diplomatically and economically damaging to both countries. And it is potentially in violation of WTO rules. But both parties to the debate can appeal to their own economic justifications. For example, while the US Senate accused China of manipulating its currency, thus contributing to unemployment in the US, opponents could counter that the Federal Reserve’s loose monetary policy intentionally depreciates the US dollar, thus exporting inflation to China. Equally, while the US could allege that a market-determined yuan would shrink the trade deficit and increase employment, China could dismiss this by saying that other emerging countries would simply replace it as a major exporter of cheap goods to the US.

In a political sense, the popular view is that the US has picked China as an obvious scapegoat for conflicting domestic interests, in order to satisfy public concern over unemployment, particularly in the run-up to an election year. US criticism and the Senate bill could be read as largely symbolic, a product of the need for Congress to appear decisive. From this perspective, relations between the two countries would ultimately remain unshaken.

This might have been true in the past but circumstances have changed greatly. The US is now desperate, with floundering unemployment rates and a faltering economy. Bernanke has described the US unemployment rate as a ‘national crisis’. The phrase carries some truth, as all of a sudden the populist ‘Occupy Wall Street’ protests have echoed and mushroomed across the US, illustrating in part how desperate the unemployed are and how strained the situation has become. As ever, the US government needs to find excuses or scapegoats, and is pointing the finger at China. And this time, at least in the eyes of some in the US leadership, severe unemployment is poised to plunge the nation into crisis, especially as almost all of Obama’s domestic reforms to reboot the US economy seem to have thus far achieved little. Under current circumstances, old views begin to take on new meaning, and the legislation against foreign scapegoats seems less likely to represent mere symbolism.

In the short term, the punitive tariffs threatened by the Senate legislation could contribute nothing more than other emerging countries replacing China in exports to the US. But in the long term, this protective measure could help the US domestic industry make structural changes and increase its competitive edge. The job losses in the US are closely linked with the loss of its manufacturing capacity: the widening trade deficit is an indicator of how anaemic the sector has become. With China becoming a more expensive business destination — due to its property bubble, rising inflation, wage increases and environmental degradation — the flurry of manufacturing plants outsourced to China is now drifting back to US shores. Given this situation, the US needs to find opportunities to pave the way for a manufacturing revival and the recovery of jobs. Unfortunately, criticising China is seen to create such an opportunity.

As a trade war between the world’s two biggest economic powers looms larger, both sides need to work to address the problem and find solutions that are mutually acceptable.

Ding Dou is Associate Professor at the School of International Studies, Peking University.