And the National Audit Office estimates that 23% of local government debt, which it put at 10.7 trillion yuan in June, depends on land sales for repayment.

WSJ: Chinese Village, Police in Standoff Over Villager's Death

Given this timidity, China could replicate much of the flexibility of a managed float by shifting the yuan's peg from the dollar to a basket of currencies, at the same time widening the band within which the yuan can fluctuate, say to 10% above or below the peg.

ECONOMIST: China should loosen its currency peg��and quickly