Why would that matter? The yuan is over-valued and will fall against the dollar once it floats. That's one reason Bitcoin is doing so well in China - its perhaps the only freely convertible currency.
What makes you say that? Seems to me the dollar is over-valued vs the yen. How else do you explain our ability to maintain such a massive trade deficit with China for so long?
2 questions so 2 answers:
1. Capital controls in China are strict. It’s easy to bring money into the country, but getting it out (to invest or spend) is more difficult. That means there are are plenty of wealthy Chinese citizens and residents looking to move their money around the world with greater freedom. - See more at:
http://marginalrevolution.com/marginalrevolution/2013/11/china-and-the-soaring-price-of-bitcoin.html#sthash.jC8Yzyqn.dpuf2. As to the trade deficit, since 1974, the container revolution has meant that factories worldwide compete on a level playing field so countries wither high wages see their industrial bases squeezed. For example, when I imported TVs from China, it cost less to get the TV from Shenzhen to Felixtowe that from Felixtowe to London. UK wages are falling in real terms and at some point the UK worker will cost as little as the Chinese worker. Meanwhile, a trade deficit is inevitable.
