Yuan decision is for State Council: Fan

While the yuan non-deliverable forwards market has priced in appreciation of about 3.2 percent over the next 12 months, Fan said he did not know whether the currency would be allowed to trend higher.

“(Policymakers) are watching the situation, they are balancing all the factors. For China, the decision-making system is more complicated,” he said.

The central bank governor is just one member of the State Council, China's cabinet.

Moreover, Chinese exports were still weak and there was significant unemployment, he said in an interview in Hong Kong.

External pressure on China to push up the value of the yuan, also known as the renminbi, was less forceful than before the global financial meltdown, he said.

“People understand now that the problem of revaluation of the Chinese renminbi is caused partly by the dollar's devaluation. So the pressure on China is not as big as before the crisis,” he said.

In terms of addressing global imbalances, however, he said the exchange rate was a “very secondary” issue.

Structural factors were more important, including increasing consumption in China and savings in the United States as well as the need to control the U.S. budget deficit.

The United States also needed to address how to raise interest rates to curb excess global liquidity and rein in volatility in the dollar, he said.

Speculative capital inflows, or “hot money”, into China had become a problem, Fan said, adding that he was pushing for the introduction of a property tax in China to head off the risk of asset bubbles.

Chinese bill and bond yields mostly rose after Fan's remarks on the risk of an asset price bubble in China.

A property tax would be difficult to implement, although the city of Shenzhen was considering it, Fan said.

Speaking earlier at a forum, Fan cited surging property prices in cities such as Shenzhen in warning of the risk of asset bubbles.

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