China may widen the trading band but it will be a very small widening, maybe 3 percent. It's not likely for China to go for a big adjustment at one time. |
The government really wants to slow down investment, but it can't control local governments who have a big incentive to invest more because it leads to higher economic growth in their regions and promotion for local officials. |
The new managed floating currency regime is just an interim system. There is a chance of a further widening of the band in the not-distant future, but it will go step by step. |