From a new nationwide poll by Pew Research Center (source: WSJ):

A new nationwide poll by the Pew Research Center finds Americans considering Asia more important by a 47% to 37% margin. In 1993, the balance of public opinion was the opposite: 50% considered Europe most important, 31% Asia. Questioned today about their interest in news from various countries, 34% of Americans say they are very interested in news from China, while far fewer say the same about France (6%), Germany (11%), Italy (11%) and even Great Britain (17%).

Public interest in China is not just academic. A large majority correctly identifies China as the country that holds the most American debt. Growing numbers of Americans also see China—incorrectly—as the world's leading economic power. Pew's latest survey finds 47% of respondents citing China as the world's top economic power, and only 31% correctly citing the U.S. In early 2008, the balance of opinion was the opposite: 41% named the U.S., while 30% named China.

While there is alarm, there isn't quite panic over China's growing economic power. A Pew Global Attitudes survey last year found that although 47% of Americans consider China's growing economic power a bad thing, larger numbers of Western Europeans see it that way. In France 67% share the view, and in Germany 58% do. 

Americans have two seemingly conflicting views on China policy. Fifty-three percent think the U.S. should get tougher with China on trade issues, but nearly as many (58%) say that U.S. policy should try to build stronger relations between the two countries. Many fewer want to scold China about its human rights (40%) or environmental policies (39%).

The bottom line is that Americans don't want to demonize China, but they have reservations about the effects of U.S.-Chinese trade. Few see China as an adversary, but most see it as a problem that needs addressing. Worries notwithstanding, most Americans for now continue to hold a favorable view of the rising Asian giant.

From today's Journal – another step toward free floating of Yuan:

China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.

The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong.

The decision is the latest move by China to allow the yuan, whose value is still tightly controlled by the government, to become an international currency that can be used for trade and investment.

Interview of Jim Chanos, who is one of the biggest short sellers on China’s real estate developers.

WSJ has a nice short piece questioning Fed's chairman's overconfidence.

Three things listed as the main limits for the Fed to raise interest rate when needed:
1) higher interest rate will hurt housing sector's recovery;

2) higher interest rate will make banking sector more vulnerable, as banks hold $2.4 trillion residential mortgage and $1 trillion mortgage backed securities;
3) slow recovery in labor market

Ben Bernanke would like to add something, beyond death and taxes, to life's short list of certainties: the ability of the Federal Reserve to quash inflation.

Speaking on "60 Minutes" on Sunday, the Fed's chairman declared he was "100%" confident the central bank could control an inflationary surge: "We could raise interest rates in 15 minutes if we have to. So there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time."

If only it were that easy. While the Fed has managed over the past few decades to keep inflation in check, in the future, its ability to choke off inflation through interest-rate rises could be constrained by fear of destabilizing still-weak property and banking sectors.

Any swift rise in interest rates, for example, could hit home prices again, in turn pressuring banks, which held about $2.4 trillion in residential mortgage debt at the end of the third quarter and more than $1 trillion in mortgage-backed securities. Also, stubbornly high unemployment could reduce the Fed's appetite to squeeze the economy.

Of course, Mr. Bernanke may speak with such conviction because he is certain any looming inflation won't be the sort the Fed cares about. While the Fed's $600 billion bond-buying program is spurring price rises in agricultural commodities, metals and energy, these aren't generally counted in the Fed's measure of "core" inflation. Core inflation would take time to emerge. And it should come from a strengthening economy, which would in theory be able to absorb higher rates.

It depends on your definition of inflation. But Mr. Bernanke, who infamously declared in a May 2007 speech that problems in the housing market would be "limited" to the subprime sector, should know better than to give blanket assurances.

Interview of Goldman Sachs’ chief economist. His view is that inflation is less of a worry, and the Fed won’t raise rates in 2011, not even in 2012.

In another effort to diffuse housing bubble, China has set an aggressive 2011 construction target of 10 million subsidized, affordable housing units for local governments, 72 percent higher than this year's 5.8 million units, with an emphasis on public rentals for lower income families.

(graph courtesy of US Global Investors)