China’s wise currency move

China changed her exchange rate regime from one that is pegged to the US$ to a managed crawl on Jul 21. This week, i Capital will examine this important development in its usual objective manner.  

Although the revaluation is much smaller than anticipated, it is the change in the exchange rate regime that is of far greater importance. While many Western economists and observers are calling for China to move to a freely floating regime, this policy change by the People’s Bank of China already represents a very major step away from her central planning past, and an even more important step towards successful economic development.