The two key players, the United States and China, see vital economic interests at stake. The Americans want a much stronger yuan and they want it now; the Chinese hint that they may swallow a slightly stronger currency phased in slowly.

On the sidelines, the other affected parties were expected to behave like a tribe of pygmies in the middle of a fight between two alpha male elephants. But the Japanese, Europeans and the South Korean hosts didn't edge back into the trees while the elephants trampled the grass.

Instead, a new kind of division emerged. The meeting didn't break down into the usual camps of emerging countries versus the old industrial nations of the Group of Seven, which is what disrupted last year's climate change summit in Copenhagen. Nor did they divide into democracies versus authoritarian states.

The new division is between the trade surplus nations and those with chronic trade deficits. So Germany and Japan lined up with China. Germany was even more publicly outspoken in its rejection of the proposal from U.S. Treasury Secretary Tim Geithner that countries should agree to cap their surpluses at a maximum percentage of gross domestic product. No figure has been publicly been broached but off-the-record sources suggested that the United States was looking for a figure around 4 percent.

Deficit countries like the United States and Britain understandably would like such a commitment to which they could try to hold the super-exporters. Their argument is that less such an evening out of the world's current distorted trading pattern can be agreed, other, harsher and more dangerous measures might become inevitable.

What they mean is a return to trade protection, which summons unhappy memories of the collapse of world trade in the 1930s when countries imposed heavy tariffs against each other and everybody ended up much worse off.

That isn't going to happen this time. There are other ways to skin this cat. The first is to use the rules of the World Trade Organization, as the United States is increasingly doing, to accuse other countries of "dumping" products, or selling them below their real cost. This allows the United States to impose controls while a slow official inquiry into the charge unfolds.

The second, which the United States is also applying, is to weaken its own currency, making imports more expensive and U.S. exports cheaper. Again, there are various methods. One is to print dollars and use them to buy other currencies, a practice available only to a country that is the world's reserve currency (although the United States may be putting this enviable position at risk). Another is to let the world know that more dollars are going to be printed, as the Federal Reserve has been signaling with its strong hints that more quantitative easing is on the way, which will lower longer term interest rates and thus depress demand for the dollar and lower its price.

And now there is a whole new way to put pressure on the Chinese and it comes from the private sector. Last week, America's remaining world-beating industrial giant GE announced that it was launching a billion-dollar investment in bringing manufacturing back to the United States.

GE is to invest the money over the next four years to build appliances, starting with $430 million in four new U.S. plants to design and build refrigerators. GE sells $6.3 billion worth of appliances a year but this is important because it means that one of the world's industrial bellwethers is in effect declaring an end to the 20-year habit of chasing "the China price" and out-sourcing manufacturing to the cheapest supplier.

GE hasn't gone mad. Its officers recognize that the world has changed and that the long-term cost of the China price to its home market carries significant costs that have not yet been fully appreciated. The loss of American jobs and the consequent decline in American consumption is becoming a strategic problem for GE as well as for the U.S. economy as a whole.

"The next generation of products are going to be made in the USA," said GE Chief Executive Officer Jeff Immelt, citing a number of factors in his decision.

They included the high quality of U.S. manufacturing; the marketing desirability for a "Made in USA" label; the rising labor costs in China and the mounting costs of transport; currency volatility and the useful sweetener of $78 million in tax benefits.

"Being made in USA tips consumers in our direction," noted Jim Campbell, CEO for GE's Appliances and Lighting division. "And we have made tremendous progress with our unions."

GE isn't alone in repatriating production and jobs. Caterpillar has been doing so throughout this year, and more and more Western corporations are rethinking the benefits of the China price -- particularly when Foxconn and Honda are facing pay rises for Chinese employees of 30 percent and more.

Throw in concerns about China's new patent laws and its state procurement rules and its demands for technology transfer and Western companies are finally starting to act on their long suspicion that the Chinese playing field is tilted against them. In the long run, that will do more to change the trade imbalances than nasty international wrangles at the G20.

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