Chinese currency revaluation may come later and smaller

We are still waiting for what has been considered to be an impending revaluation of the Yuan against the US dollar. We may be waiting for a while.  That is at least what I read in the Chinese press.

The issue of currency revaluation is, of course, a particularly important issue for those of us in the toy industry as it will force up the costs of Chinese imports. As we are all only too aware, costs have already been going up this year due to increases in Chinese labor rates and raw materials so any additional upward pressure will send prices up even further.

In April, I had written posted a blog entitled “Reading the Chinese Press” that predicted that when the revaluation came it would be smaller than anticipated. It seems that I might have been on to something. Here is how the May 20, 2010 China Daily puts it in a piece entitled “Yuan revaluation may remain on back burner:”

The chances of an early revaluation of the renminbi look unlikely and could happen much later than expected, considering that the nation’s trade surplus may see steep erosions due to the European debt crisis and the growing trade protectionist measures against China’s exports, leading economists and experts said on Tuesday…Earlier estimates were that the nation would allow the renminbi to rise during the second quarter, with overall gains of 3 to 5 percent for the whole year. Economists now consider such a move unlikely and expect any currency moves to be deferred till the end of the year with a smaller range and overall gains of 2 to 3 percent.

I have found similar articles Shanghai and Hong Kong journals so this is a widely distributed point of view.   Is it being disseminated to calm Chinese domestic concerns or does it reflect Chinese government policy? I am betting on the latter.