Eoin Treacy's view China, in common with a number of other swiftly progressing markets, views the value of its currency as part of an arsenal of policy tools utilised in achieving the most competitive position possible for its economy. This means that it would be rash to expect change to occur rapidly or as a result of external pressure. The Chinese will allow the Yuan to float more freely when it suits their own agenda, not anyone else's.

The peg to the US Dollar was relaxed from 2005 as domestic inflationary pressures mounted. Concern over commodity price rises outweighed those of the manufacturing sector at the time. From 2007 a hard peg was re-implemented to help shield the economy from the drop off in demand for exports. The peg was relaxed once more in June at least in part to combat nascent inflationary pressures without having to raise interest rates which are a broad spectrum instrument rather than a targeted vehicle of monetary policy which would be more suited to today's environment.

China has aspirations of allowing the Yuan to float more freely but this is a long-term ambition. It is only likely to pick up pace once the domestic consumer economy has developed to a stage which can lessen the country's reliance on exports. Increasing margins by moving up the value chain in terms of manufacturing and bolstering healthcare and social security provision are all part of a broader policy to allow the economy to become more resilient to external shocks. Greater freedom in the exchange rate can also be viewed from this perspective.