A policy of yuan depreciation would do nothing for China’s economy, offering few benefits for exports and possibly triggering capital outflows, influential economists said yesterday at the Boao Forum for Asia. In response to suggestions that the central bank may weaken the currency to boost exports, the economists warned the move risked a counter-reaction. They also called for less government intervention in the exchange rate. Long Guoqiang, vice director of the State Council’s Development Research Centre, said there were risks to devaluing the yuan. “The ideal situation is to keep a relatively stable yuan, not to devalue it, otherwise it may risk competitive devaluation of other currencies and harm China’s overseas investment,” Long said. Why the yuan doomsayers have got it all wrong “[But] the yuan is not yet a global currency and the country’s capital account is not yet fully liberalised, therefore the policy on the yuan should take the domestic economic situation into account, rather than [only] watching capital movements.” Premier Li Keqiang has repeatedly sought to dispel doubts about the yuan, saying there is no basis for its continued depreciation. Long said the yuan would strengthen over the long run if China could raise and sustain competitiveness in capital- and technology-intensive sectors. The central bank ended a soft peg of its yuan to the greenback on August 11 with a nearly 2 per cent devaluation of the yuan against the US dollar. It was intended to give the market more scope to determine the yuan’s daily midpoint, but poor communication about the move triggered market panic of a further slowdown in China’s economy. Asian Development Bank vice-president Stephen Groff said on the forum’s sidelines on Tuesday that the slowdown in China had long been anticipated and was not a surprise. Yuan trades at three-month high after European Central Bank eases currency war fears Groff said China needed expertise and experience – rather than “grand money” – to overhaul its economy. “We are regularly consulting with the Chinese government on a number of different issues. We do provide inputs in 13th five-year plan,” Groff said. Peking University economics professor Huang Yiping, who is also a member of the central bank’s monetary policy committee, said the yuan’s level rested on whether the economy could grow sustainably and whether the government could rein in financial risks. “As long as there are no big problems in China’s economy, the yuan is very likely to remain stable,” Huang said. “As a big economy, China cannot give up independence in monetary policy decision making. It is hard to control capital flows, so the exchange rate policy should be more flexible.” He said that no matter what changes occurred in the short term, the overall direction was towards a more flexible yuan.