China is developing fast and, even though it has some issues with human rights, pollution and corruption, people have been speculating that it could be the next global super power.

China has a population of 1.3 billion, which is four times the U.S. population of 308 million. Simple math dictates that if four Chinese people can match one U.S. person in productivity, China will surpass the U.S. in production.

Saturday, China signaled that it would abandon its currency peg against the U.S. dollar.

Then on Sunday, China's central bank said there would be no significant appreciation in the renminbi (the currency of the People's Republic of China) against the dollar. What's interesting is that this statement came one week before the G20 meeting on Toronto.

China's exports rose 46% in February, signaling a sharp pickup in consumer demand in the United States and Europe. China reported a $7.6 billion trade surplus for the month.

This is the third month of increases in exports and the fastest in three years. Orders from the U.S., Europe and Japan accounted for almost half of the growth.

China's imports also rose by 45% over the previous year, led by crude oil for its factories.

China, which has kept its currency, the yuan, artificially low in order to keep the cost of its exports low and promote a domestic economic boom as its nation develops, is finding that the strategy has a negative effect: domestic inflation.

Unlike market-based currencies characteristic of the foreign exchange, China's government sets the yuan's value -- allowing it to trade in a tight band, currently at about or near 7.2730 yuan to the U.S. dollar. China argues that the yuan/dollar peg is necessary to promote economic growth and protect young, developing businesses and sectors.

And the strategy is working: China has registered +10% GDP growth for more than four years; has the world's third-largest economy, in purchasing power parity terms, behind the European Union and the United States; and has generated massive trade surpluses, particularly against the U.S.

Still, the U.S. counters that the peg keeps China's goods at artificially low prices and hence gives China's companies an artificial competitive advantage in trade. China has turned aside those and other U.S. concerns, particularly the trade deficit, arguing that if the U.S. wishes to lower its trade deficit, its citizens should save more and consume less, and the U.S. government should eliminate its budget deficit.