Yuan seen reaching a balanced level

Experts refute US claims of 'undervalued' currency

China's foreign exchange regime is moving toward a market-oriented approach, analysts said Sunday, predicting a sustained yuan weakness in the coming year while rebuffing criticism from the US government that the yuan exchange rate still remains "significantly undervalued."

China's central bank is gradually withdrawing intervention in the exchange market, which signifies the yuan exchange rate has established a new formation mechanism based on market supply and demand instead of government control, Li Yang, vice president of the Chinese Academy of Social Sciences (CASS), the country's leading State-run think tank, said at a forum held in Beijing on Sunday.

It means the yuan exchange rate against the US dollar has approached a balanced level at present, Li said.

"It's unprofessional for the statement from US President Barack Obama that said the US will continue to put pressure on China's yuan appreciation." Li said.

According to a media report from China National Radio, Obama said on December 11 in the President's Export Council's conference that the US will continue to put pressure on China's yuan appreciation and the US Treasury's last report showed the yuan exchange rate still remains "significantly undervalued."

The US Department of the Treasury said on October 15 in a semi-annual report to Congress that China should go further and allow the market to play a greater role in determining the exchange rate and the yuan continues to have room for further appreciation based on the growth of the Chinese economy.

In fact, the yuan has appreciated a lot against the US dollar since the beginning of China's exchange rate reform in 2005 and is now at a reasonable range, Fu Bingtao, a senior analyst at the Agricultural Bank of China in Beijing, told the Global Times on Sunday.

"There are more international critics saying that the yuan exchange rate has reached a balanced level at present and one even said that the yuan is slightly overvalued," Fu said.

On Friday, the yuan-dollar central parity rate stood at 6.1186, up from 6.0969 at the end of last year, signifying a possible yearly depreciation in 2014. Fu expects this trend of depreciation to continue next year without government intervention.

China's yuan over-appreciated in 2013 and its current depreciation is reasonable, He Weiwen, co-director of the China-US-EU Study Center under the China Association of International Trade, told the Global Times on Sunday, noting there are no economic factors such as a rapidly increasing trade surplus that will cause the yuan's further appreciation.

According to the latest data from the General Administration of Customs, China's trade surplus in the first 11 months was $332.5 billion, accounting for only 8.5 percent of the total volume of China's exports and imports, a rate which He said is still within a reasonable range.