As the dollar sinks, will the yuan float?

Many scholars believe with the United States' increasing debt, the global position of the dollar is weakening. As the dollar declines, China, now the largest holder of U.S. dollars in the world, is understandably concerned. China's controversial peg to the U.S. dollar, combined with its $2.4 trillion in foreign reserves and trade imbalances, is debated daily by politicians and economists. This article presents arguments for and against the current China monetary policy in economic and political contexts. Statements from China's leaders, other global leaders, and economists are reviewed. Economic and political obstacles and incentives in the context of their influence on the China government are considered. Finally, milestones for business leaders to look for are suggested to help determine China's possible path to a fully convertible yuan. © 2010 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]