Wiggle it. Just a little bit

“ADOPTING a more flexible exchange-rate regime serves China's long-term interests as the benefits…far exceed the cost in reorganising industries and removing outdated capacities.” That is the kind of thing Tim Geithner, America's treasury secretary, might say to his counterparts in Beijing as part of the strategic and economic dialogue between the two countries. But it is in fact a quote from Hu Xiaolian, deputy governor of the People's Bank of China (PBOC), the country's central bank.

In a series of speeches last month, Ms Hu argued that a freer exchange rate liberates China's monetary policy; spurs innovation in China's export industries; and channels investment to its service sector, where many of China's new jobs will be found. China's decision on June 19th to make its currency more flexible was therefore an “important move”.

But in the two months since, the yuan has hardly budged (see chart). On a trade-weighted basis, it is 2.3% weaker than it was on June 18th. Last month China ran its biggest trade surplus since January 2009. The gap between the central bank's philosophy and its practice highlights divisions in China's economic policymaking. The PBOC administers the country's exchange-rate policy, but it does not make it. That responsibility falls to the State Council, China's cabinet.

It is the strategic and economic dialogue between these two bodies that will ultimately determine the yuan's fate. Even as the yuan clings to the greenback, it is being groomed for a bigger role in the world. This week the PBOC said that some of the yuan held offshore by traders and foreign central banks could be invested in China's bond markets. China may be trying to carve out a niche for the yuan as a “regional trade currency”, thinks GaveKal Dragonomics, a consultancy. That would increase the yuan's usefulness outside its borders and even push up its value—if China lets it.