REUTERS in Beijing

Beijing needs more time to prepare for making its currency more flexible, a senior economic official said yesterday, pouring cold water on speculation that long-awaited changes could happen soon.

"China doesn't have conditions to adjust the renminbi exchange rate at present," Li Deshui, head of the National Bureau of Statistics, said after the bureau's quarterly news conference.

He said there was also no immediate need for Beijing to raise interest rates further despite earlier announcing faster-than-expected economic growth of 9.5 per cent in the year through the fourth quarter.

"Whether we need to raise interest rates will be based on the economic situation. But I can't see any need right now."

In October the central bank raised interest rates by 0.27 percentage points, the first increase in nearly a decade.

A currency change could not happen immediately, Mr Li said.

"Can we achieve such conditions in one or two days? This requires a process," said Mr Li, who is also a member of the central bank's monetary policy committee that plays a vital role in determining interest rates and yuan policy.

"We need a good and feasible plan, and formulating such a plan also needs time."

His comments dented speculation of any imminent policy change, as shown by the yuan derivatives market, where investors bet on the timing and scale of a possible revaluation.

Mr Li's remarks also came ahead of a meeting of the Group of Seven nations scheduled for February 4 and 5 that is expected to see officials call for more currency flexibility from China and other Asian countries.

The US and others have pressed Beijing to allow the yuan, which is pegged at about 8.28 to the dollar, to move more freely, saying the current level makes Chinese goods unfairly cheap on world markets.

Mr Li also issued a stern warning to speculators. "Those who hope to make a fortune by speculating on a renminbi revaluation will not succeed in making a profit."

Beijing leaders have insisted they will not embark on reforms as long as speculation is at fever pitch.