The appreciation of Chinese yuan will not only hurt China's economy but also destabilize the world economy, said a prominent US economist on Friday in Tokyo.

The appreciation of yuan would deter the process of yuan's convertibility, cut off foreign investment, lower China's economic growth from 7.5 percent to below 4 percent, aggravate the nonperforming loan and deflation problems, said Rober A. Mundell, a Colombia University professor who won the Noble prize in economics in 1999.

"In the fifty-year history of the IMF -- the International Monetary Fund, it has never told a country that has an inconvertible currency to appreciate it," he told a seminar sponsored by Japan's Axes Securities Co. Ltd, saying "the right approach for China is to open up its exchange market."

"The yuan's appreciation wouldn't help the world either," he said, noting the United States, which accuses China of manipulating yuan at lower rates to gain competitive edges in export market, has been in substantial current account deficit since 1975.

He said the United States was encountered with a big deficit when former President Ronald Reagan was in power due to tax cut and increasing spending on military buildup to win the Cold War.

Another important factor for the deficit is that the Asian central banks have been stocking up the US dollar as it plays a role as the world currency.

"The appreciation would derail China's economic growth and have very gloomy effect on Asia" because China's growth during the global slowdown is one of the good factors to stimulate exports, he said.

Mundell pointed out that Japan's exports also have been benefiting from the growth over the past several years when its exports to other major industrialized nations have gone down.

Tokyo, like the United States, also is pressuring China to revalue its currency.

He described the appreciation as "a bad idea" as it would do "no benefit to Japan," mean "trivial or nothing to the United States," damage the Southeast Asian economy, and destabilize the world economy.