China would do best to let the yuan appreciate sooner in small steps rather than wait, central bank adviser Fan Gang said in comments published by an official magazine.
Fan, the only academic member of the central bank's monetary policy committee, said China may have to resort to revaluing the yuan by a significant margin if it did not allow the currency to rise at a faster clip.
Failure to step up the pace of appreciation could spark trade frictions as Washington potentially threw up barriers to Chinese imports, Fan said in an interview in the bi-monthly China Finance magazine, published under the authority of the central bank.
The authorities needed to allow the yuan to "appreciate in an appropriate way" as a way of minimizing potential repercussions, he said in the latest issue of the magazine.
Still, Fan reiterated his view that critics should not blame Beijing for trade imbalances between China and the United States.
The U.S. trade deficit with China hit a record $232 billion last year, fueling frustrations within the Bush administration over the slow pace of Beijing's currency reform.
China needed to act to address domestic concerns caused by the nation's large inflows of capital and massive trade surplus, which were making it harder to manage monetary policy, he said.
Beijing needed to direct monetary policy towards controlling consumer inflation and keeping a lid on runaway stock and property prices, he said, adding that he did not think the Chinese economy was overheating.