Beijing should resist calls to support ailing exporters by decreasing the value of the yuan and stick to the gradual appreciation of the currency, a central bank adviser has said.
Speaking at a forum in Beijing yesterday, Fan Gang, a member of the People's Bank of China's monetary policy advisory committee, said exports might have dropped last month, but the yuan's exchange rate was only a secondary reason for the country's weakening trade.
'I believe [the yuan] is still in the revaluation phase from past years through next year,' Mr Fan said.
The mainland scrapped the currency peg with the US dollar in July 2005, linking the yuan with a basket of varied currencies and let it float in tightly managed bands. The yuan has since gained 18 per cent against the greenback.
The yuan fell 0.8 per cent on Monday last week, the biggest since the change, sparking expectations that Beijing would allow it to keep weakening to help exporters.
However, many economists said the decline was Beijing's ploy ahead of the Sino-US strategic economic dialogue last Thursday and Friday.
Last week, Commerce Minister Chen Deming said the cause of weakening exports was shrinking demand and not currency exchange rate.
