The emergence of China as an economic superpower

The Chinese central bank allowed the yuan to strengthen almost five percent in September; the change was widely applauded by media and the Bush administration. They said China’s government was getting serious about its foreign exchange policy. However, since then, it hasn’t done very much.

There is no question that the yuan will get stronger over the long run as long as the current conditions hold, but if the yuan only moves in one direction, that makes life too easy for the currency speculators.

Professor William Pesek, a columnist for Bloomberg News, said before, China has perfected a potent strategy to deal with speculators: confuse them.