China Tests Stronger Yuan on 12 Industries

China is testing the impact on 12 industries of a possible revaluation of the yuan on their companies, the China Council for the Promotion of International Trade announced Thursday.

Zhang Wei, vice chairman of the business group announced the tests in a press briefing in Beijing Thursday, one day after The World Bank recommended that China adopt higher interest rates and a stronger currency to fend off inflation fueled by rapid growth.

Zhang said the government should delay the revaluation of the yuan to give exporters more time to recover from the global recession, according to Bloomberg News.

The yuan’s 12-month forwards climbed 0.1 percent to 6.6651 per dollar.

Foreign pressure has intensified since Premier Wen Jiabao on March 14 rebuffed calls for an end to the 20-month-old dollar peg, saying the yuan isn’t undervalued.

In its quarterly assessment of China, the World Bank raised its forecast for the growth rate in China’s GDP to 9.5 percent from the 8.7 percent rate it forecast in November.

Separately, Dominique Strauss-Kahn, the managing director of the International Monetary Fund, also said Wednesday that the yuan’s exchange rate is too low,

Forward contracts still reflect bets the yuan will strengthen 2.4 percent from the spot rate of 6.8264 in the coming year as the central bank seeks to curb the cost of import prices and rein in inflation.

China has kept the yuan little changed at around 6.83 per dollar since July 2008 to help exporters survive the global financial crisis. The central bank allowed the currency, also known as the renminbi, to strengthen 21 percent since a peg against the dollar was scrapped in July 2005.

The stress tests announced Thursday have been organized by the China Council for the Promotion of International Trade.

The tests covered more than 1,000 companies, large and small, said Zhang.

The results of the tests will be announced before April 27, he said. The electronics and machinery industries are the most affected because they had signed contracts to supply products and would post losses if it appreciated, Zhang said.

Contact Peter T. Leach at pleach@joc.com.