China currency change to be gradual

Following up on yesterday's coverage of the story China and it's announcement it was going to make changes in it's currency system comes this New York Times piece that says this will be a gradual process. The additional announcement was said to be released to reassure the Chinese but I also have a feeling it was designed to provide more information to the world-wide financial markets as well.

The central bank’s statement coincided with signs of a backlash in China, where many view a weak currency and the accompanying strong exports as a sign of national sovereignty. The Chinese decision to tolerate a more flexible currency drew caustic postings on Chinese Internet sites, like one on Sohu.com: “I didn’t imagine I would see the day when China would submit to America and agree to appreciation of the renminbi.”

Postings like this criticizing the government’s announcement seemed to disappear almost as quickly as they appeared, an indication that government censors were active. But China’s determination to limit the rate at which the renminbi rises against other currencies, particularly the dollar, is likely to upset members of the U.S. Congress, who have been pressing for quick changes.

When world leaders gather this weekend in Toronto for meetings, enthusiasm about China’s shift to a more flexible currency may be dampened by Beijing’s public caution that any changes in the value will be slow and modest.