Is a supersovereign currency really anti-U.S. or really smart?

While the International Monetary Fund struggles to work through its identity crisis, China has decided to rock the boat of global finance by trying to dethrone the dollar as the world's benchmark currency.  WTF, China? America is the best country on earth. We're happy with the dollar standard; why aren't you? And if the dollar is so bad, why do you continue to prop it up by buying so many U.S. Treasury bills?

Here's a quick recap of conflicting signals. On March 11, U.S. Treasury Secretary Timothy Geithner entreated the international community to commit an additional $500 billion to the International Monetary Fund. On March 23, Chinese central bank governor Zhou Xiaochuan proposed an international reserve currency backed by the IMF on the very same day that Vice Governor Hu Xiaolian assured reporters that China would continue investing in Treasury bills.

Just a few days later, on March 27, Vice Premier Wang Qishan intimated that Beijing would be willing to contribute more by buying IMF-issued bonds but reasserted the need for the organization's power structure to be readjusted to more accurately-and favorably-reflect the scale and scope of its investment. On Friday at the G20, President Hu Jintao made good on the promise by committing an extra $40 billion to the fund—with the promise of future reforms to the organization's structure—as he repeated the call for a more diverse international monetary system and stricter regulation of domestic-currency-issuing policies.

What's to be made of this strange sequence? A recent Newsweek article suggests that Chinese nationalist hardliners view the IMF as a proxy of the United States and explains away the new wave of "anti-dollar" rhetoric as an attempt to appease these internal factions' pressure on Beijing. These nationalists, Newsweek argues, want to quit buying U.S. debt and invest more in domestic "infrastructure, defense and social services." The article also cites a recent Pentagon report on the expansion of Chinese military power and the recent tiff in the Pacific as evidence that Beijing has already embarked down a path of saber rattling.

But is it really that simple? The repeated call for an international reserve currency backed by the IMF, taken in isolation, does imply doubt in the ability of the U.S. economy to meet its debts in the long run. But before we rush to defend the dollar's honor, consider that China's ostensible shot across the bow was delivered in quick combo with the thumbs-up of doubling down on T-bills and the rallying cheer of conceding a much-needed boost to the fund. Big sticks are certainly worth watching for. But sometimes it also helps to listen to diplomats who speak softly.

Take Vice Premier Wang's language, for example. While first offering to buy IMF bonds in an editorial for the London Times, he wrote, "The international community should recognise that the trend towards economic globalisation is irreversible and should take credible steps to reject all forms of trade and investment protectionism." That's not exactly ringing the nationalist bell.