US Federal Reserve officials are not optimistic that China will drop its currency peg against the dollar anytime soon because that decision is in the hands of a State Council focused primarily on political stability rather than financial issues.
The State Council apparently believes that China's political stability hinges on continued strong economic growth which will provide the tens of millions of new jobs needed by workers moving out of agriculture and into the industrial economy. And that growth in turn is seen as dependent on keeping the yuan pegged tightly to the US dollar.
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