The mainland will not devalue the yuan but will hold off in the hope of earning international to further its ambition of joining the World Trade Organisation, China expert Martin Posth says.
Mr Posth, a vice-chairman of US management consultancy Arthur D. Little's Asia-Pacific advisory board, believes Beijing is keen to show responsibility on a regional political level, realising that if it did devalue it could send currencies tumbling again.
Also, by maintaining the yuan at its present higher rate, exports might slow.
Its large trade imbalance with the US, however, would narrow, pleasing the Americans.
'They are looking for arguments they can use in [WTO] negotiations,' Mr Posth said.
'They realise they can help the world end the financial crisis.' Mr Posth said the mainland should try to regain competitiveness by improving productivity through speeding up reforms of state-owned enterprises.
