floating the Yuan

The Chinese government has just released the nations currency peg on the US dollar - sort of. They have only allowed for a small variance. While currency traders may laud the move as a step in the right direction the overall effect in the manufacturing and industrial world is minimal.

The greatest factor in rising Chinese manufacturing prices has been the increase in raw material costs. A stronger Yuan means they can buy cheaper raw materials, and this, in effect, nulifies any increase in labor wage and/or operating costs.

The move comes in a fashion typical of China - slow, deliberate, and moderate.