However, some economists argued that the appreciation of the RMB is a double-edged sword, as it will make Chinese exports more expensive and therefore reduce export volume. Some export-driven small- and medium-sized companies may not be able to survive and have to lay off employees.

"If China were coerced into really large appreciations of the RMB, it could face the same deflationary fate as Japan in the 1980s and 1990s -- and all this without reducing its trade surplus," said Ronald McKinnon in an article published earlier by the Wall Street Journal.

Zhou Xiaochuan, governor of the People's Bank of China, said that there was no timetable for a further widening of the daily floating band between the RMB and the U.S. dollar.

China raised the value of yuan by 2 percent to 8.11 per U.S. dollar and started linking it to a basket of currencies on July 21, 2005, and allowed it to move 0.3 percent above or below the parity rate against the U.S. dollar.

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