China and the yuan: What's at stake

This article discusses the plan to boost the value of the yuan in order to make U.S. goods more competitive versus Chinese exports. This could bring a 2-3% rise in the yuan. The yuan may be undervalued anywhere from 15-40% and a more significant rise may be needed to help the undervaluation. A slow adjustment is necessary, otherwise comes the risk of inflating an asset bubble in China. A boom and a bust could lead to another global recession. Of course, there are risks of having a stronger yuan. A higher yuan means Chinese products will be more expensive for U.S. consumers. It could also mean higher interest rates and higher borrowing rates for U.S. homeowners and businesses.