China and the poisoned chalice

ONE of the larger surprises of the summer is how the Chinese authorities have allowed an apparently technical matter - the possible inclusion of the yuan in the International Monetary Fund's (IMF) special drawing right (SDR) - to become the stuff of global headlines.

Whether or not the Chinese currency becomes part of the IMF's composite accounting unit should be a question for specialists. But instead - as part of the wider fallout over the performance of the Chinese economy, and as a result of the Chinese leadership brandishing its credentials for SDR inclusion just a little too energetically - it has ended up on the front page of The New York Times.

The Chinese decision last month to widen the band for the yuan's fluctuations against the US dollar should have been part of somewhat geek-like technical preparations for freeing the exchange rate and meeting one of the IMF's conditions for bringing the Chinese currency into the IMF reserve unit - at present limited to the US dollar, euro, sterling and the yen.