I don’t think it would cause inflation at home if the yuan were allowed to appreciate, but it would damage their export industries.
the chinese will not let their currency appreciate. Doing so would roll back 20 yrs of economic growth since the outcome of an appreciating currency is slower growth or inflation or both. hundreds of millions in china have tasted economic opportunity and they will not let it go. the communist party’s survival is contingent upon capitalism being successful and the only vehicle available is a cheap yuan to facilitate their exporting industries thus keeping millions employed and invested. the greenback will weaken up to a point however china will continue to buy up treasuries tus propping up the $ to maintain its BOT surplus continuous. The $ is the only game in town. The fed knows this the ECB knows this and the Chicoms know this crystal clear. The only upside in a depreciating $ is the debt that was issued when the $ was strong will be worth a hell of alot less since the debt is valued in nominal terms. This is one big house of cards if you ask me. Currency not attached to a store of value is a disaster waiting to happen IMHO.