While some observers see China as an economic Third Way, the truth is rather different.

The Chinese central bank is not that big a blip on Beijing’s radar. Its officials are well into monetary economics, but they aren’t represetative of the country’s ruling elite – and they are woefully short of power in this hierarchically strangled economy.

There is, for example, a State Council. 28 ministries function at the level below it, and on this secondary level,the playing field isn’t level: the central bank is ranked a meagre 27th.

Any truly important fiscal and economic decisions will be made by the Communist Party’s Politburo Standing Committee.

Wen Jiabao chairs the State Council, and is a powerful member of the Politburo Standing Committee. He has asserted vigorously that he doesn’t believe the yuan is undervalued, and recently accused U.S. Yuan value critics of protectionism.

The Beijing leadership isn’t considering serious currency reform, because unlike the Central Bank, it doesn’t like (or understand) the principle of capitalist monetarism.
Rules about currencies rising as a direct result of national economic success are, for example, very probably foreign to this all-powerful Executive body. And if there’s one thing the Chinese dislike, it’s foreigners.

The central bank consults with the Chinese financial community on technical issues involving loan quotas and avoidance of toxic debt. But on such matters there are still bureaucratic regulators who probably have the final say. Western commentators who see China as having unreservedly embraced Friedmanite capitalism are deluded: in the final analysis, the PRC views progress through a Maoist glass darkly.