In a news briefing on the release of the World Bank's five-year development strategy in China, David Dollar said China was still a developing country with a weak financial sector and a lot of weak institutions.

    "For the exchange rate, I have a lot of sympathy for the Chinese Government approaching that cautiously," he said. "I agree with the macroeconomists who think that it's in China's interests to allow some appreciation of the currency but I respect the government wanting to make that move gradual."

    "A big change in the exchange rate really could have unpredictable effects on economic growth," he said.

    The Group of Seven industrial powers, the United States in particular, has steadily cranked up pressure on China to allow its currency to move more freely on the foreign exchanges and appreciate more in line with its huge trade surplus.

    Many U.S. lawmakers accuse China of "artificially suppressing the value of the yuan" against the U.S. dollar in order to gain an additional export trade advantage.

    Despite a 2.1 percent upward revaluation of the yuan last July, China has continued to peg the yuan closely to the dollar and says any further loosening of the yuan will be gradual.

    (Source: Shenzhen Daily/ Agencies)