Economy_Revaluing the yuan, for the sake of economy or the politics?

Central bank governor Zhou Xiaochuan's words in a recent forum, was reported as the chance for China to speed up move to revalue the yuan, though the political pressure from the outside has soften these days.

``If there is more pressure from outside, it will force us to speed up our reform,'' Zhou said at the Boao Forum in southern Hainan island yesterday, reported Bloomberg. Zhou said China welcomes international pressure because it will force the nation to speed up needed financial reforms. Still, ``we don't see that the pressure is that strong right now,'' he said.

Two days before, Federal Reserve Chief Alan Greenspan said China should loose the peg between yuan and U.S. dollar for China's good sake, without saying the peg caused the large deficit of U.S.. He said the economic pressure said the growing economic pressure will compel China to alter its policy of pegging its currency to the U.S. dollar at some point, and the sooner it happens the better. "The sooner they move off this fixed (rate), the better off for China's economy." Reuter reported.

The manufacturers in U.S. and other countries has argued that the peg of yuan to U.S. dollar gives an unfair disadvantage for Chinese products selling overseas. U.S. Treasury Secretary John Snow repeated at the same day that the new, tougher administration line on China, saying the country has taken the necessary steps to handle a flexible currency now.

"Hard fist first, and then soft words", says an old Chinese saying. That's what the nations who want to push China loose the peg did.