What a curious world we live in. Communist leaders in Beijing desperately need capitalist growth to maintain political control. They fear anything that might slow their export engine—an engine that has delivered nearly 10 percent growth year after year. They adore what Professor Ronald McKinnon of Stanford has to say: don’t change the peg between the dollar and the yuan, because on that path lies more than a decade of misery, just as Japan has suffered since 1990. And, by the way, Chinese leaders love the prestige and power that comes with a treasure trove of $2.7 trillion foreign-exchange reserve. From Beijing’s perspective, all is well in the Middle Kingdom.
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