Washington has been putting pressure on Beijing to change its monetary policy and re-value its currency. In one year, the yuan has in fact climbed a mere 0.1 per cent against the US dollar to reach 6.6651 yuan per dollar. China has retorted that US pressures are designed to reduce part of US debt held by Beijing.

At the end of the annual session of the National People’s Congress last week, Premier Wen Jiabao said that the yuan was not undervalued and that it would not budge. However, a number of economic analysts believe that the current tests mean that the Chinese government is at least considering that possibility.

“It’s only a matter of time,” said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp in Singapore. “We expect the yuan to rise around the middle of this year.”

The tests “could be a sign they are looking into the option of renminbi appreciation, but whether this will indicate an imminent appreciation is not yet certain,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group Ltd.

The stress tests, organised by the business group, covers more than 1,000 companies, large and small, said Zhang Wei, vice chairman of the China Council for the Promotion of International Trade. Electronics and machinery companies would be the most affected because they have signed contracts to supply products and would post losses if the yuan appreciated.

The United States are not prepared to wait and see. “I suspect there will be many important negotiations in the weeks ahead,” US Ambassador to China Jon Huntsman said. “This isn't just an American issue,” he explained. “There are many countries that feel the same way.”

In any event, China appears to be trying every avenue before a direct confrontation. A top Chinese envoy is expected in the United States next week to discuss both the revaluation of its currency and China’s trade surplus with the United States.

“Channels of communication between our two sides are open. All issues of concern to either side can be discussed through these channels,” He Ning, head of the North American division at China’s Commerce Ministry, said at a media briefing this morning in Beijing.

He announced that Vice Commerce Minister Zhong Shan will visit the United States on 24-26 March for discussions focused on the "Sino-US trade balance and trade frictions”.