US Treasury secretary-designate Tim Geithner reckons China is manipulating its currency and should let it appreciate. A growing band of analysts reckon the opposite: that devaluation may instead be on the cards.

Measured against the dollar, the renminbi gained some 20 per cent in the three years following its revaluation in July 2005. It has been treading water against the dollar since then. On a more pertinent trade-weighted basis, however, it rose 10 per cent between July and November. Furthermore, Chinese wage inflation has been running at about a 15 per cent annual rate. This, plus the renminbi’s appreciation, may even have left China uncompetitive.