They're not going to stop propping up the dollar any time soon.

Whenever economists' talk turns to the long-term health of the world economy, it's not long before the discussion gets to “What about China?” In the last year, the financial crisis has been, understandably, the main entree in the buffet of economic news. But as we've all learned by now, big macroeconomic changes usually build for a long time before they whack us over the head. And of the biggest and most important shifts to watch now is one that you may very well have missed: the fall of the dollar and the slow but steady rise of China's yuan renminbi.

Currency exchange rates are one of the wonkier provinces of economics, but they're worth knowing about. The most essential and easy-to-understand thing about currencies is that they affect the prices of international imports and exports. A weak renminbi makes Chinese imports cheap (good for consumers) but makes U.S. products more expensive in China (bad for American exporters).

Under normal circumstances, a trade imbalance like the one that the United States runs with China will cause changes in currency exchange rates that will act to even it out. But for a long time, China kept the dollar-renminbi rate fixed (we'll get to how in a second) at 8.28 renminbi to the dollar. American politicians looking at the enormous U.S.-China trade gap routinely complained that China kept its currency artificially undervalued to help its exporters. While almost certainly true in the past, this became more arguable after China got rid of the fixed rate in 2005 and let the renminbi rise steadily for three years.

Since the financial crisis hit, China has tried hard to prevent the renminbi from rising further, keeping it at about 6.82 to the dollar. Managing currency rates is complicated, but essentially it depends on the laws of supply and demand. To keep the renminbi from rising, China's central bank trades dollars for renminbi, putting more of its own currency in circulation and reducing the supply of dollars. This leaves China with enormous holdings of dollars, which the country's central bank plows back into U.S. Treasury bonds. China's now the biggest foreign holder of Treasuries, with some $800 billion of U.S. government bonds.

The dollar-renminbi trade is a perfect case study in being careful what you wish for. Though American exporters complain about an undervalued renminbi, China's currency management turns out to have some enormous advantages for the American economy. China's voracious demand for dollars—and the Treasury bonds to sink those dollars into—is a key reason why the U.S. government can borrow cheaply and keep U.S. interest rates low.