Started on Nov 4, the two-day China-US Strategic Economic Dialogue (SED) is likely to witness Washington pushing greater pressure on Beijing for the revaluation of the yuan. However, according to the analysts, amid such global financial turbulence, China’s foreign exchange policy should help domestic economic growth but not rise too fast against the US dollar. The fast revaluation of the yuan would hurt its export, increase unemployment and further harm the global economy because “China is also one of the largest importers in the world”, said Liu Dongliang, currency analyst with China Merchants Bank.

The yuan fell dramatically during the three trading days of this week. Its central parity dropped to 6.85 against one dollar and remained at the level on Wednesday. However, the Dow Jones figures showed that the exchange rate of the yuan was down 499 points from 6.8349 to 6.8848 against the dollar on Monday. This was pushed by market transactions.

Rumors spread as the market rate changed. It is said that China would adopt a “weak-yuan” policy to boost its falling exports. “But I’m not sure whether the central bank would change its policy,” said Liu. “We need to monitor the trend during the coming days to decide the official stance.” His point has been agreed by the head of China economic research unit of UBS Wang Tao. He noted that it is not the right time to determine whether it is the significant change in exchange rate of the latest move.

Since August 1, even though hardly moved against the dollar, the yuan has up by about 10 percent against a basket of currencies, said Wang. The exporters has already significantly hit by rising costs as well as sharply reduced falling overseas demand. The revaluation of the yuan has made their lives more difficult, and it is likely to hurt exporters further next year.

A stimulus package of $586-billion was announced and by the government on Nov 9 and the interest rate was cut by 1.08 percent. It aimed to help stimulating domestic demand and keeping the economy from global crisis to the largest extent.

Experts keep a positive attitude toward the revaluation of the yuan and they agreed to have the yuan fall a little because it would be helpful for exporters and make the stimulus package more effective.

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After the central government announced last Sunday a 4 trillion yuan ($586 billion) stimulus package to boost the economy, it is the first time the personal evaluation of the premier was made public on the situation.

The State-owned Assets Supervision and Administration Commission (SASAC) have recently warned large state-owned enterprises (SOEs) to be cautious. Minister Li Rongrong told them not to rush into overseas mergers and acquisitions. Li told them to hold their money and said there will be plenty of opportunities in the future.

With much of the stimulus package already in the implementation process, Justin Lin, World Bank chief economist told China Daily on Nov 12, he thinks the country will achieve 8-9 percent GDP growth in 2009 and 2010, and help the economics in the whole world.

From the experts’ point of views, although the economic growths in the developing countries will fall next year, they will still in an apparent higher level toward the global standard. “If China can maintain its dynamic growth, I think the world will find it much easier to fight this global recession,” Lin said.

Robert Zoellick, the World Bank Group President, said in a press conference earlier on Tuesday that China had set an excellent example in dealing with the global financial crisis in a very constructive way. He had suggested many countries with such a way China had followed.

China is ready to contribute to the global anti-crisis efforts directly.

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Gross domestic product grew 10.1 percent in the second quarter from a year earlier, the slowest since 2005, compared with a 10.6 percent pace of growth in the first three months of the year, the statistics bureau said today in Beijing. China will likely allow the yuan to appreciate more slowly and relax controls on fuel price increases. As reported some export oriented industries has tried to persuade the government to rein in currency gains and increase export-tax rebate.