China's decision to restore the crawling peg for the renminbi after a two-year fix was cleverly timed. Sandwiched between the US-China Strategic and Economic Dialogue forum last month and the forthcoming Group of 20 meeting in Toronto, the announcement at the weekend will spike the guns of the US, where pressure for trade sanctions has been building. It will also shift the G20 focus away from the renminbi to the subject of global imbalances, where many countries see the US as more to blame.

Yet while Beijing's move has received much fanfare, especially in excitable financial markets, a more sober assessment is needed. This was first and foremost a political, not an economic, decision, with symbolic rather than substantive consequences.

Think back three months. In March, the US, UK, France, Canada and South Korea wrote a formal rebuke to China to complain about backsliding on several matters, including exchange rate policy. Strong pressure was building in the US Congress to label China a currency manipulator, which would have resulted in more formal trade sanctions and a hearing before the World Trade Organisation. Tit-for-tat trade tariffs between the US and China had become almost commonplace, and hostility was building over other issues, including US weapons sales to Taiwan and the Dalai Lama's visit to the White House.