China should let its currency rise against the U.S. dollar as soon as possible and allow for a one-off 10% appreciation of the yuan, an official at a government-backed think tank said on Jan. 6.
Zhang Bin, a senior researcher within the Chinese Academy of Social Sciences, said an appreciation of the Chinese currency would not hurt the world's third-largest economy. "In my opinion the yuan is undervalued and needs to be adjusted ... the sooner, the better," Zhang said, ahead of the release of a research report on the nation's exchange rate policy.
"We think a 10% rise is acceptable because it will not have a significant impact on the overall economy in the short term."
A more flexible exchange rate policy was needed to resolve imbalances in the Chinese economy, Zhang said. "The foreign exchange rate is a very important policy tool for reforming (China's) economic structure," he said.
The value of the Chinese currency, which has effectively been pegged to the U.S. dollar since mid-2008, has been a bone of contention between Beijing and its Western trading partners, which say it is kept low to boost exports. While China has acknowledged the need to boost domestic consumption and reduce its reliance on exports and investment to drive the economy, it has so far refused to budge on its currency policy.
Premier Wen Jiabao said last month in an interview with state media that China would not yield to pressure to allow the yuan to appreciate. "This could be a big issue facing us next year in our economic work," Wen told Xinhua news agency.
But he added: "I believe this year as major currencies around the world devaluated, that maintaining the value and stability of the yuan was a contribution to the international community."
Copyright Agence France-Presse, 2010
