The Chinese Central Bank announced that it will adopt a policy that liberates the exchange rate of the Yuan from that of the dollar, in compliance with the demands by China's partners in the Group of Twenty (G20), and also with the United States' strong insistence on the need to revaluate the Chinese currency against the major international currencies, in particular the U.S Dollar. In truth, the U.S officials included their request to Beijing of adjusting the Yuan with a firm tone, to which the Chinese capital responded with a ‘sovereign' retort as it considers its internal affairs – including its national currency – to be a red line regarding which the central authority in the People's Republic of China alone can take the appropriate decision. Furthermore, the G20 Summit in London (April 2009) was preceded by an American call for the emerging economic powerhouse in the Central Asian Empire to adopt a policy that is more suited to both sides. This call was then reiterated during a bilateral summit in June, which was the first episode of the ‘strategic and economic dialogue' between the two giants. In addition, Washington is trying to push China into complying with its demand of floating the Yuan before the summit in Toronto (Canada), as the U.S administration and other partners in the West led by the euro zone are claiming that the Chinese currency is at forty percent less than its actual value. China, which has become the beating heart of the world, and a magnet of international focus since 2009, starting with the Olympic Games and including the Shanghai World Expo among other things, continues to astound the world also in terms of the growth rates it is achieving. This is particularly important, given the economic fragility witnessed even in the strongest and most developed economies elsewhere. China is also striving to become a global centre of innovation and scientific research. In international transactions, however, a deficit to one partner is a surplus for another. Based on this equation, the American deficit becomes a reserve in China, which the latter invests intensively in U.S Treasury Bonds – including sovereign bonds. As a result, the relationship between America and China is akin to the relationship between a large debtor and his bank: While the bank is concerned about its loans, the debtor is ultimately in a position of power in negotiations. And in the event of bankruptcy, the bank loses everything, and one can only imagine the magnitude involved if the debt exceeds one trillion dollars. Since the mid-first decade of the third millennium, the Sino-American relations have begun feeding imagination and speculation. This is because the strong rise of China's economy was closely linked to the relation with the United States, and with that, American families found in Chinese saving a way to fund their consumption habits that went beyond reasonable levels. In parallel, America believed that a bilateral cooperation may lead to the inception of a new global group (G2) between the first and the third (some believe second) largest economy in the world. In fact, this is what Washington is aiming to achieve through the ‘Strategic and Economic Dialogue' with Beijing. However, China prefers to maintain its freedom to choose its partners from the perspective of its own goals. To justify its choices, China cites that it is a poor country, and that its GDP per capita income is only one fourteenth of that in the United States. Since China is still an emerging nation, it does not have the desire to sacrifice its interests in the name of global responsibility which the partners want China to shoulder. For this reason, the Chinese Central Bank announced that it will maintain the Yuan at a reasonable and stable level, and that it will not raise its value all at once. In this regard, China allowed the Yuan to regain 21 percent of its value between July 2005 and July 2008, with respect to the dollar. However, the Chinese authorities opted out of the liberalization process of its national currency's exchange rate, as this adversely affected its exports, and rushed to maintain an almost fixed rate of the Yuan versus the dollar. This balance envisioned by China provoked its global partners, who accused it of maintaining a low exchange rate of its currency. In the aftermath of the global financial crisis, the issue of the Yuan's value adjustment has become one of the hottest topics for the United States, which doubled its efforts to achieve this. However, this is a much more complex issue for Beijing. On the one hand, China is keen on not creating a sudden and rapid disturbance in the growth pattern of its economy, and on the other hand, China finds itself caught in the trap of the US Currency. In truth, China's currency reserves rose to 2240 billion dollars between 2000 and late 2009, including 600 billion dollars accrued since mid-2008, when the process of the liberalization of the Yuan was stopped. According to many international pundits, the revaluation of the Yuan would prove to be beneficial to China. For instance, a strong Yuan will allow China to develop in line with a pattern that is less reliant on exports. China, which has given in to this fact, does not reject it, but believes that the time has not yet come for it to adjust the value of its currency. Instead, Beijing wants to support its export-oriented industry, which provides jobs and which alone has the capability of absorbing the influx of emigrants from the Chinese countryside; the stakes involved here affect the stability of the country. On the basis of these calculations, China has developed two strategies, including one that translates over the long term into the rearrangement of the global financial system with a view to adopt a new reserve instrument. This is closely connected to the growing role China plays in global financial organizations, along with other emerging countries that support its bid such as Brazil, India and Russia. This is while the second strategy aims at developing the global role of the Yuan, in order to render it a primary reserve currency on par with the dollar and the euro. During the hot dialogue, the crisis began in the euro zone. The exchange rate of the common European currency deteriorated, and it appeared as though the dollar-pegged economy is targeting it along with the Yuan. China then stood at the gates of Greece with its heavy sovereign debts, and expressed its decision to invest in the Hellenistic state. But nonetheless, it ‘complied'. And with China's compliance, the U.S pressure continues.
