All the bluster on Capitol Hill about punishing China for suppressing the value of its currency misses the bigger picture: We and the Chinese need each other to remain strong.

China holds almost $1 trillion in U.S. debt. That gives it a huge stake in our nation’s future. Much like a landlord or banker, China relies on us to pay our bills. Considering how the U.S. is asking the world to keep lending us money, we have a financial interest in making sure China remains satisfied with its huge investment here. Otherwise our borrowing would become more costly and difficult.

We’re also a vast market for Chinese goods. Those imports from across the Pacific have helped suppress inflation here ― by keeping U.S. retail prices in check ― even as the Federal Reserve has printed money to cover our soaring national debt. And contrary to popular impressions, we ship a lot of our goods to fast-growing China as well. It’s fashionable in some circles to blame China for hollowing out the U.S. manufacturing sector, but the trade relationship has helped both countries much more than it has hurt.

Keep those thoughts in mind when China President Hu Jintao arrives in Chicago on Thursday. He’s planning a state-visit-slash-trade-mission aimed at highlighting the pragmatic examples of economic cooperation with America’s industrial and agricultural heartland. He picked the right city: Chicago’s ties with China run deep, thanks in no small part to pioneering local companies such as Motorola.

In advance of Hu’s trip, China has sought to downplay tension over U.S. arms sales to Taiwan, the military attacks of its client state North Korea, and its own record of human-rights abuses. Instead, the debate over our mutual economic future has taken center stage.

Protectionists led by U.S. Sen. Charles Schumer, D-N.Y., have dusted off proposals for punitive legislation. “China doesn’t play by the rules and seeks unfair economic advantage,” Schumer recently complained, citing the undervalued currency that makes Chinese goods so cheap that U.S. companies can’t fairly compete.

Schumer would lower the bar for Washington taking action against currencies deemed “misaligned.” His notion is unworkable, but that’s beside his point ― which is scapegoating China for the U.S. job losses of recent years.

Yes, raising the value of China’s currency would help lift the U.S. economy at the margin. But America’s problems have much more to do with out-of-control borrowing and spending by our citizens and government alike, not to mention an easy-money policy that the Fed continues today.

A better approach would be impressing Hu with Chicago’s free-market traditions.

Inside China, the cheap currency has kept wages low, hurt living standards and raised prices for food and other necessities. Letting market forces prevail would boost domestic consumption, helping China and the U.S. in the long run. Let’s hope that in addition to some ceremonial trade deals, America’s most prominent landlord takes home a fundamental lesson from his visit to our city.

(The Chicago Tribune, Jan. 18)