Yuan appreciation is not favorable for the world economy?

 The research institute of China's Ministry of Commerce published an essay that touched upon the issue of yuan appreciation and its adverse effects on the global economy. The essay notes that increasing the value of the Chinese currency would hurt rather than help world economic recovery.

"Forcing the renminbi to appreciate would undoubtedly be unfavorable for the Chinese economy, and likewise do no good for the sustained recovery of the world economy," said the essay, which appeared in the Chinese-language International Business Daily, an official newspaper of the Ministry of Commerce.

China's "renminbi exchange rate policy is appropriate and successful," it added.

"The (economic) recovery remains fragile and under these circumstances, appreciation would present major risks for the Chinese economy."

Meantime, Yu Yongding, an economist and former central bank adviser, in separate comments on Monday said that China should adjust its economic structure, including lowering its dependence on exports, as it faces the possibility that a growing U.S. current account deficit will lead to dollar depreciation and rising U.S. protectionism.

"Lowering the current account surplus is in line with China's own interests," Yu was quoted as saying at a weekend forum.

Still, the Ministry of Commerce institute insists that the yuan should not grow otherwise it would sap China's economic recovery by dampening foreign investment, cutting into business profits and job growth, and threatening to increase financial deficits and bad bank loans.

China's cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.

"If Chinese production costs rose due to shifts in the (yuan) exchange rate, then naturally the United States would expand its imports from other developing countries," it said, "and the trade balance as a whole would not improve."