China Daily reported that the yuan recently climbed to the highest level since 1993 amid growing foreign demand for a faster currency appreciation. However a senior Chinese official warned that if the yuan appreciates too fast and it could harm the world''s economy as well as China.
As per report, the yuan was traded at 6.6830 against the greenback recently advancing 2.2% since China removed its peg to the US dollar in June and pledged to add more flexibility to the yuan.
Mr Yi Gang vice-governor of the People Bank of China, the country central bank said China is committed to moving toward a flexible exchange rate regime but "our approach will be a gradual one. He said that we will do our part to help correct global imbalance through a gradual appreciation of the yuan."
Mr Yi''s comments echoed the tone set by Premier Mr Wen Jiabao during his visit to Europe where he called on European leaders to refrain from pressing for a stronger yuan and warned a sharp appreciation may cause social unrest in China and lead to a disaster for the world.
Mr Chen Daofu a senior economist at the Development Research Center of the State Council said "Calling for a rapid yuan revaluation is unreasonable as it takes time for resources to flow from the trade sector to the non-trade sector after an appreciation."
He said that "A fast appreciation will block the effective flow of resources, causing serious social and economic problems and even dragging down growth."
Mr Zhao Xijun deputy head of Renmin University of China school of finance said it is not in any countries'' interest if China growth loses steam, as the country has been a leading force for global economic recovery and is growing into a large importer.
The IMF said in its latest World Economic Outlook report that China expansion in recent years was the linchpin for global trade and boosted numerous economies. It predicted the Chinese economy will grow 10.5% this year compared to its forecast of 4.8% global growth in 2010.