... when they say in Shanghai, "You are one in a thousand", it means there are a million more out there to replace you.

The Chinese political elite has as one of its priorities to generate enough jobs to avoid political crisis, and if a discounted exchange rate policy against the US$ generates the net capital account inflows to the US that allows the US to continue generating the net current account outflows that provide an external market with actual profit margins that helps keep so many businesses afloat ... well, that's a good thing.

However, they also believe in covering their bases, which would seem to be what they did when "under pressure from the US" they moved to the Singapore model of hidden basket peg.

If China ditches the US$ it will not be as a neo-con fantasy geo-political power play, it will be because they think that mine is tapped out of new export jobs, and are changing their primary focus to a new external market.

Under the Chinese economic system, they've got to keep playing that general game until they've ridden out the demographic bulge, or else face a very high risk of losing power. And under the iron law of oligarchy, as a first priority, a long-entrenched oligarchy will do what it believes to be necessary to hold onto power.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.