Forgive the bad play on words. Sometimes I can’t help myself.
The more I read and think about this China yuan thing, the more convinced I become that the PBOC’s decision had little if anything to do with events in the outside world. Sure, if the Chinese leadership can make their trading partners think that they’re actually listening, and responding to, the fulminations of the Chuck Schumers of the world, then great. If they can trip up the speculators, and hold off the hot money, then great. But there are things going on in China that are more important than what Chuck Schumer thinks.
The People’s Bank set the yuan a little higher today, but in trading it fell a little lower. It was all within the prescribed band of 0.5% on either side of the yuan, and it’s a warning shot to speculators that “flexible” does not mean a one-way bet that they can easily play. Still, while the People’s Bank may have an ax to grind with speculators, that wasn’t their main target.
Our colleagues over at the China Real Time Report blog have done a superb job of following the develops within China’s labor force. The problems are disparate; workers striking for higher wages, a spate of suicides at one specific factory, a series of apparently mentally insane people killing schoolchildren. But they all point to the same general area: rising inequality among the populace.
On that last, “recent rhetoric in China’s state-run media suggests the government is publicly signing onto the view that rising social imbalances along with insufficient treatment for the mentally ill contributed to a recent spate of attacks on schoolchildren,” Brian Spegele wrote. Before, the government treated the killings as random acts that could be stopped with better security. Then, there are the labor shortages.