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mychina, you're missing one important point: Chinese economy has a diffrent structure than US-economy. There are two main points that you've missed:|
1. 23 percent of China's GDP are produced for exports (as Chinaimport already stated) - and these 23 percent will just drop away.
2. Nearly 60 percent (according to UBS securities estimates) of China's GDP come from the real estate sector - thus they are made through the real estate bubble. If you allow Chinese to invest abroad (that's what you'd basically do if you let the yuan float freely), the bubble will burst and China's GDP would actually be smaller.
But most important of all: the Chinese yuan isn't that cheap compared to it's market value. When you look at purchasing power parities, you'll find that the yuan is maybe 40 percent undervalued - but not, as you've stated, like 86 percent... so even if the two upper constraints wouldn't show up, China's GDP would be still smaller than the USA's.
However, there's a reason why Chinese government keeps the yuan cheap. Trust them - they've got excellent experts there in Beijing :)
Anyway, most important of all, you should consider Chinese people's situation: how are they living? When you see, how much the average Chinese worker earns, you'll soon figure out that there is a lot to catch up...
Currently, Chinese economy is rather unfair: Chinese produce 5 trillion Dollars, but 2,4 trillion Dollars are profits of foreign companies that flow abroad. The 1,3 billion Chinese have to live with the other half. And a big part of that other half belongs to a view rich Chinese (China now has more millionaires than many European countries!). That's a rather unsatisfying situation...