is the gold price all in the yuan, page-7

The Chinese Govt is fighting a losing battle. The only question is how soon they change tack.

By increasing bank reserve requirements (and demanding they are kept in $US), they starve their own economy of credit and exacerbate the slowdown. Until recently, they wanted to slowdown. Now, they're worried about it.

A slowdown in a country which runs strong current account surpluses will tend to put upward pressure on the currency.

If the Chinese Govt recognizes that their mercantalist currency game is over for the moment and that they are squeezing the life out of their own country with bank credit restrictions and subsidies which are made ever more expensive by a cheaper currency (think oil, electricity, rice, soya in particular), they might simply announce a change of bank reserve policy.

If the $US rally really is being driven largely from China, the effect of their banks swapping back out of $US could reverse the index's gains just as quickly as they were made. [I doubt that there are many Chinese banks out there that really want to hold their reserves in $US.]