China may let yuan gain by March, says expert

The currency may gain as much as 5 percent in 2010, wrote Zhang Ming, deputy chief of the International Finance Research Center at the Chinese Academy of Social Sciences, which advises the government on economic policy.

“The rebound in exports means aggregate demand in China's economy is headed into an overheating zone again,” Zhang wrote. “It's relatively difficult to tighten fiscal and monetary policies, while the yuan's appreciation will help accomplish the same tightening effect.”

Overseas sales climbed 17.7 percent in December from a year earlier, the first increase in 14 months, as a global economic slump eased. Policy makers have kept yuan gains in check since July 2008 to help exporters cope with a slide in overseas demand, after letting the currency strengthen 21 percent in three years.

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