On Monday, China's top foreign-exchange official said in a published essay, "We will further improve the exchange rate mechanism, and incessantly make it more responsive to market supply and demand."
On Tuesday, China's premier, Hu Jintao, arrived in the United States, en route to a summit meeting with President Bush. One of the likely areas of their conversation: pressure on China to upwardly revalue the yuan. U.S. politicians and many economists have long argued that China's exchange rate undervalues the yuan by 15 to 40 percent, making its products relatively cheap and contributing to the vast trade deficit that the United States runs with China.
On Wednesday, Bloomberg reported that China's yuan experienced the biggest one-day rise in value since its initial revaluation last year.
Market forces? Or a nicely wrapped gift from China on the eve of the summit meeting? You be the judge, but far be it from us to suggest that China's leaders would, gasp, intervene in the workings of their economy to score political favors with the United States.
Whatever the reason, anything that reduces tension between the United States and China is to be applauded. Let's hear it for pseudo market forces!