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China's step-by-step plan for convertibility

Travelling eastwards from Dubai after the IMF/World Bank meetings it is striking to encounter near universal scorn - among bankers, economists, corporate treasurers, investors and central bankers - for US policymakers' attempts to bully China into revaluing its currency.

China is a country with a current account surplus equivalent to 1% of GDP and shrinking: so what exactly, they ask, is the Americans' problem. Looking only at the bilateral trade balance and pointing the finger of blame impresses no-one.

It's most remarkable to hear this in a region that has so much to fear from China.

Investment bankers around Asia have been patting themselves on the back for a recent string of deals out of Taiwan in the fast-reviving Asian capital markets. Privately, they admit to huge uncertainties about the future of that country as owners of its leading companies move manufacturing to China. There can only be one or two regional service centres and every country seems to want one.

China's nearest developed market - Hong Kong - is suffering a fourth consecutive year of deflation as its high-cost economy makes the painful adjustment of closer integration with the low-cost giant to the north. Suffering from 3% annual deflation, fiscal deficits and unemployment in excess of 8%, Hong Kong sees the attractions of taking the adjustment through the exchange rate.

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