A gradual and modest appreciation of yuan is good for China's economy, a senior Chinese central bank official said in comments published on Thursday.
China will continue to push forward reforms of the yuan exchange rate mechanism, Sheng Songcheng, head of the statistics department at the People's Bank of China (PBOC), told the Financial News, a paper run by the central bank.
"The positive impacts of China's yuan reform on the domestic economy have significantly outweighed the negative impacts," Sheng was quoted as saying.
The yuan has gained just over 3 percent since its depegging from the dollar in June, setting the stage for a measured appreciation in the onshore market.
Sheng cited a central bank survey of 5,000 manufacturers and 2,100 exporters as saying that the yuan's rise has helped cut import costs, reduced inflationary pressures and promoted trade balance.
"If we allow the yuan to appreciate 3 percent a year against the dollar, it can boost imports by 0.3 percent, reduce exports by 0.6 percent, and cut the trade surplus by 6 percent," Sheng said.
The yuan's appreciation has not hurt Chinese exporters. Instead, exporters have adopted to yuan appreciation well and have significantly increased their competitiveness by climbing up the value chain, Sheng added.
Since the de-pegging of yuan against the dollar in June, China's yuan appreciation has dragged down domestic inflation by around one percentage point, Sheng said, without elaborating.
An informal poll of China-based dealers over the last week showed that many expect the yuan to gain roughly 6 percent next year, hitting 6.25 per dollar in late 2011, as the exchange rate plays an increasing role in the battle against inflation, which rose to a 28-month high in November.
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