Beijing studies severing peg to US dollar.

Truth be told, the hed is a bit alarmist: The Chinese are talking about starting to talk about allowing the Yuan to appreciate a bit:

China’s central bank chief laid the groundwork for an appreciation of the renminbi at the weekend when he described the current dollar peg as temporary, striking a more emollient tone after months of tough opposition in Beijing to a shift in exchange rate policy.

Zhou Xiaochuan, governor of the People’s Bank of China, gave the strongest hint yet from a senior official that China would abandon the unofficial dollar peg, in place since mid-2008. He said it was a “special” policy to weather the financial crisis.

“This is a part of our package of policies for dealing with the global financial crisis. Sooner or later, we will exit the policies.”

Pretty weak tea,^* actually, and I think that everyone, even the PBC realizes that the current peg is unsustainable, and my guess, based on absolutely nothing, is that they are talking about talking because it’s a way to kick the can down the road.

^*Pun not intended.^†
†No, really, it was unintentional.