Washington - The
International Monetary Fund (IMF) on Wednesday said the Chinese yuan
currency remains undervalued despite the Communist government's pledge last month to move towards a more flexible exchange rate.
In an annual review of the Chinese economy, the IMF said the Asian power was leading the world out of a 2009
recession and should expect double-digit growth in the coming year, even as the government ends public spending measures to prop up the economy.
China's currency has appreciated about 0.75 per cent since the government loosened the yuan's peg on the dollar in mid-June. But the yuan "remains substantially below the level that is consistent with medium-term fundamentals," IMF staff wrote.
The IMF acknowledged there was a deep divide among its country members over the assessment, and over whether
China has done enough to make its currency more flexible. The IMF's Executive Board, made up of 24 countries, gave only lukewarm
support to the report.
The US and western Europe, suffering from major trade deficits with China, have pushed for the Asian power to more quickly allow its currency to appreciate.
"Several directors agreed that the exchange rate is undervalued," read a statement from the board. "However, a number of others disagreed with the staff's assessment of the level of the exchange rate, noting that it is based on uncertain forecasts of the current account surplus."
