The Obama administration is desperate to put the economic fight with China on even terms. Unfortunately, the scales are tipped so far in Beijing’s favor, America may not have the strength it needs.

Before any big fight, the competitors must do their homework.

Schoolyard bullies use lunchroom consultations with other bullies to learn about their intended target’s strength and ability.

Professional boxers watch hours upon hours of rival’s past fights, looking for a single weakness.

And the American government? What does Obama do?

He complains to the World Trade Organization (WTO).

For several years now I have been studying the growing trade feud between the United States and China. If both sides were not absolutely dependent on each other, I am positive they would have come to blows long before now.

But we need China’s cheap imports and it needs our cash.

Since the start of the current financial fiasco last September, China has been rightfully worried about the value of the dollar. Its economic leaders have jaunted across the globe in search of anybody willing to rid the world of a greenback-denominate economy.

Of course, Uncle Sam is not happy about the situation. But all the States can do is what it did today, file a complaint with the WTO.

That’s it… I’m telling

The Obama administration officially showed its disdain for China’s export restrictions by knocking on the door of the WTO. It is a small move, with little more than a hint of a threat behind it, but it is a surefire way to test the vast stretch of water that lies between the two traders.

If China takes the complaint seriously and comes to the table ready to loosen its grip on key commodity exports (coke, magnesium, bauxite and silicon metal), it is a sign that things may not be as bad as they are.

But it is not going to happen that way.

The last thing China needs right now is more American dollars. It has nearly a trillion greenbacks it does not know want to do with.

Beijing also wants to spur growth inside its borders. The best way to do it is to keep its raw material costs down. By distorting competition and allowing domestic producers a shot at cheaper raw materials, China can stay a step ahead of western rivals.

Of course, it is not fair and will ultimately hurt the country’s ties with its trade partners.

But at this stage, China has all the leverage it needs over a country desperate to find a partner to fund its record-setting debt.

Companies like Nucor (NYSE:NUE) and U.S. Steel  (NYSE:X) are trading in positive territory today, as the market contemplates the value of a positive outcome to the filing. But do not expect the action to last too much longer.

Team Obama is doing little more than formally vocalizing a complaint and checking to see how China reacts. If the country refuses to comply, there is not much we can do. To use a bad, but apt cliché, there are bigger fish to fry.

Right now, I am bullish on anything China. It looks much healthier than its trade rivals.

Commodities are the key to playing the situation. That makes the Commodity Carry Trade more valuable than ever.

Source: Obama Tattles on China