Yuan has been appreciating steadily over the previous years. This has been achieved by the effective government policy of disallowing the yuan to appreciate in the short-term so as to allow the economy to recover.
Once the recovery of the economy has been achieved, the yuan will become a market-based currency. This is so as the Chinese central bankers know that under a flexible exchange rate, the China's growth will shift its focus to domestic demand, allow resources to be allocated more efficiently and reduce the risks of asset bubbles.
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