Published: Friday, 13 Nov 2009 | 4:14 AM ET

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President Barack Obama has promised to broach the yuan's exchange rate when he visits China from Nov. 15-18, putting the spotlight on a controversial issue that has the potential to shake currency markets and diplomatic ties.

China let the yuan rise 21 percent against the dollar between July 2005 and July 2008, before effectively repegging the currency to help its exporters survive a slump in demand as the global financial crisis worsened.

In the depths of the downturn, that policy drew relatively little international criticism as China appeared to be providing badly needed stability to global markets.

With the world economy slowly recovering, China is coming under greater pressure to let its currency appreciate as a way of cutting its huge trade surplus and reducing global imbalances.

Jan 22, 2009

• Obama believes China is "manipulating" its currency, Timothy Geithner, Obama's choice to head the U.S. Treasury says in written Congressional testimony, using a term the Bush administration avoided for years to describe Beijing's foreign exchange practices.
• Officials later put the choice of words down to sloppy staffwork, however, not a change of policy.

April 15

• Treasury report declines to name China a currency manipulator. It says China's yuan continues to be "undervalued" against the dollar, but that Beijing's practices do not fit its legal definition of currency manipulation — despite what Obama said on the campaign trail.

April 16

• U.S. senator Debbie Stabenow says she will introduce legislation directing the Commerce Department to determine whether a country's currency is "fundamentally misaligned." She says the United States needs new tools to thwart imports from countries such as China that undervalue their currencies.

June 8

• World Bank chief Robert Zoellick welcomes China's efforts to make its currency more international and warns against abrupt, unilateral moves that could worsen the fragile global financial situation.

Sept 15

• The yuan will be increasingly recognized as a global currency as its economy develops, says senior central bank official Liu Guangxi.
• On the same day, Guo Qingping, an assistant People's Bank of China governor, says China will proceed cautiously in promoting the yuan as an international currency.

Oct 3

• China will stick to its current exchange rate policy and aim to maintain market stability, Yi Gang, a central bank vice governor, says at an IMF meeting in Turkey.

Oct 27

• The United States welcomes the rise in the yuan in recent years but wants the currency to climb further, Commerce Secretary Gary Locke says in Guangzhou.

Nov 5

• The yuan's de facto peg to the dollar is unsustainable in the long run, but Chinese academics are deeply divided on what should replace it, one of China's leading government researchers says.
• On the same day, European Central Bank President Jean-Claude Trichet says that a steady rise of China's yuan currency would help rebalance the world economy.

Nov 6

• Japan's deputy finance minister, Yoshihiko Noda, calls on China to free up the yuan.

Nov 9

• Obama tells Reuters he plans to raise the issue of the yuan currency when he visits China.

Nov 10

• Foreign Ministry spokesman Qin Gang restates China's long-standing policy to maintain the basic stability of the yuan at a reasonable and balanced level.

Nov 11

• In Singapore, World Bank chief Zoellick calls the dollar's role as a reserve currency "relatively secure," but says over the next 10-15 years the renminbi will provide an alternative once it is internationalized.
• On the same day, China sends its clearest signal yet that it is ready to allow yuan appreciation after an 18-month hiatus, saying it will consider major currencies, not just the dollar, in guiding the exchange rate.

Nov 13

• The head of the world's most valuable bank by market capitalization, Industrial & Commercial Bank of China, says a stronger yuan will not be conducive for the global economic recovery.

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