SHI TING

Beijing is unlikely to bow to increased pressure to revalue the yuan because of the US dollar's recent slump, analysts say.

The central government does not need a stronger yuan to rein in the economy, which is already slowing from the effect of macroeconomic controls.

Last month's interest rate rise further reduced the need for a loosening of the yuan.

The yuan has been pegged within a narrow range at about 8.28 to the United States dollar for nearly a decade.

"The interest rate hike makes the government much less likely to hit the currency brake," said Zeng Gang, an economist from the Chinese Academy of Social Sciences. "You don't want too many variables at work at the same time ... it would imply financial instability."

The economic outlook for next year is still unclear, with forecasts for economic growth ranging from 7.5 per cent to nearly 9 per cent.

The central government is still concerned about the chances of a hard landing if its basket of control policies proves too effective.

Allowing the yuan to appreciate would hurt China's exports and worsen the country's already large unemployment problem, Mr Zeng said.

Exports account for 25 per cent of China's gross domestic product, and a decline in exports would slow the economy.

But keeping the peg to a sliding US dollar means Beijing is likely to face increasingly louder complaints about what some trading partners, especially Japan and the European Union, see as an unfair competitive edge.

China's exports have been one of the biggest beneficiaries from the decline of the dollar, which started about two years ago.

But this had more to do with the country's abundant low-cost labour and a record flow of foreign direct investment than an under-valued yuan, Mr Zeng said.

State media have reported that the central government will closely monitor the slide in the US dollar before making any moves to loose the peg.

Central bank governor Zhou Xiaochuan said last week at the G20 meeting in Berlin that Beijing had yet to set a timetable for the lifting of the currency peg.

He hinted that the government would wait to see more macroeconomic data before taking any such step.