Yoshua wrote:The value of the yuan would be torn between the falling value of oil and the value of gold which is based on psychology. The Chinese currency manipulators would have added more complexity to the yuan.
Complexity makes it harder to control, but also makes it harder for an external actor to control as well. I know they'd LIKE the Yuan to be at true float and freely convertible, but they still have legitimate concerns regarding food and energy security and domestic market price stability. Their economy is much larger than Russia's too, so just yoinking the plug and saying, "today is the last day we buy and sell currency to manipulate value" is just too dangerous for them. Russia survived it because they export both food and energy, and even then it gave them a solid year of really wacky domestic retail price issues.
So, China has to do this trick much, much slower, and much more cautiously. If rice goes from 5 Yuan a kilo to 10 Yuan a kilo (or whatever, to lazy) overnight, some very angry working class Chinese are going to be on the streets; and that's the one thing the PRC can not have.
This is just one more gentle step amongst many that they been up to for the last decade or so. I suspect they hope to reach float and not actually make an announcement, just gradually less and less manipulation till their is none, with the primary banking lever on the economy becoming central bank interest rates.