Fitch Ratings, a major international rating agency, does not think it is time for China to revaluate its currency as it is trying to avoid a hard landing. It also predicts China's economy will grow by 7.5 percent for 2005 and 7 percent for 2006.

James McCormack, head of Asia Sovereigns with Fitch, explained this idea in his speech at a conference in Beijing on June 7. He has observed that the net trade contributed too little to China's economic growth, although China's exports showed so much strength.

The fixed asset investment, however, is "exceptionally high" and the Chinese government has realized the importance of rebalancing the drivers of economic growth. Given this, he does not expect the Chinese government will want to have stronger yuan which will have negative impact on the country's exports.

In addition, he thinks the issue of RMB exchange rate is one of the reasons for the trade disputes on textile between China and US and EU. He has noted that the US and EU should solve their own economic problems through reform to spur the economy. He agrees the restrictions on Chinese exports will make it more difficult for China to have net trade contribute more to the country's economic growth.

By People's Daily Online