China yuan change postponed?

Seems likely that the yuan revaluation will not happen in the near-term. The dollar has appreciate about 15% against the euro which means that the renbimbi peg will also see a 15% appreciation against China's largest trading partner, the EU. The cost of imports will be higher which means that the China surplus will decrease. This is what China wanted to avoid. Of course, the exports of the EU will be cheaper so we should see the EU trade surplus increase.

People's Bank of China states that it is committed to investing in Europe, the EU stabilization plans, and that Europe will overcome it difficulties. It would like to see stabilization for the simple fact that China needs a stable world to sell its products. It is becoming a better consumer of goods from the rest of the world but the export-driven coastal economy needs to see global growth.

We do not expect to see any action on the yuan until there is a period of stabilization with the euro. This is consistent with the cautious approach after the US financial crisis. Whether this is foot dragging or appropriate caution is not important. Past history has always shown that as volatility has increased, trade has declined which suggests more conservative government policies.