Some members of the US Congress are publicly creating pressure on the government in China to allow their currency, the Renminbi or yuan, to float. The belief is that it would naturally rise in exchange for the US dollar in particular, making goods and services in China more expensive. The benefit to the US is that a more expensive yuan would increase the incentive for US companies to move production facilities from China to the US. (Of course, they may just move to another favorable currency economy but that will be after the elections. Right now the expedient political move is to pressure China.) In his article, Get the Yuan Right, Prove Pundits Wrong, Andy Xie describes his beliefs about the cause and effect issues surrounding the internal difficulties facing the government of China, price inflation and the mother of all housing bubbles, making their decision for what to do with the pressure from D.C. very difficult.
Andy Xie makes the following observations, "By all measures (stock value to GDP ratios, inventory value to GDP ratios, new property sales to GDP ratios, price to income ratios, rental yields, and vacancy rates) China's property market is one of the biggest bubbles ever. It's probably much bigger than the U.S. property bubble relative to GDP.