i don't understand why people analyze the u.s.-chinese economic relationship by looking at the theoretical consequences of momentous and precipitate shifts in policy which will never happen. [what if they sell all their bonds? what if they go to a free float next week?] if the chinese government's decision to allow a 2%[?] range for a formerly fixed yuan doesn't convince you that they'll move slowly, i don't know what will.

i think any attempt to understand what might happen should be predicated on gradual shifts in position. yes, there can be exogenous shocks of some kind. but there won't be a massive sale of the pboc's treasury bonds next wednesday.

the u.s. and china are currently chained together, addicted to one another's bad habits - u.s. debt financed consumption, chinese profitless prosperity and heedless capital investment. dealing with this will be like trying to separate siamese twins joined at the forehead, the abdomen and the groin.
what's wrong with fed policy isn't some arcane problem like using the wrong metric. what's wrong is having to deal with the legacy of greenspan's political cowardice, his habit of giving the economy ever increasing "fixes" of liquidity to help it avoid any pain.