Based on the most recent rounds of talks between Chinese and US officials, the question is no longer whether the Yuan will appreciate, but how much. Some believe that the Chinese currency will rise to 6 yuan against 1 dollar by the end of 2011. The exchange rate currently stands at 6.83.

At a recent resin conference in Hangzhou, Yu Wei, the deputy general manager for Chinese resin trading firm Xiamen Xiangyu Corp., made that prediction, citing other analysts.

A change in that direction will make China more expensive as a destination for foreign direct investment as well as an exporter, which in turn will make China less competitive in the global marketplace. Will that make American manufacturing more competitive? Or will manufacturing move out of China and flow to cheaper regions - such as India? Time will tell.

But Yu made an interesting argument on a strengthening yuan's impact on Chinese domestic market, according to notes by my colleague Steve Toloken, who covered the 2010 China Plastics Industry Conference last week.

In short, a rising yuan will benefit Chinese consumers but hurt the domestic manufacturers. Imported products will become more affordable, giving consumers more purchasing power. Yu said that will help China transform into more of a domestic growth driven model.

Meantime, he acknowledged, competition in China's domestic market will further intensify, and the rising currency could bring speculative ''hot money'' into China, further complicating the market.