No Yuan Appreciation Before June: Roach
China is unlikely to allow its currency to appreciate in the near term, at least not before the first half of 2010, Stephen Roach, chairman of Asian division at Morgan Stanley, told CNBC on Wednesday.
"Maybe if the Chinese feel a bit more comfortable about the sustainability of the recovery, they will return to the gradual renminbi dollar appreciation that was in place a few years ago before the crisis broke out," said Roach.
"The West is beating up on China for a big revaluation. That is not going to happen in my view. I think its a false issue. It's just standard political posturing, especially in election year, with very very high unemployment rates in the development world," he added.
Roach added that overtime, China's current account surplus will start to decline as the economy becomes more balanced and less reliant on exports, but he does not see this happening yet as demand from China will remain fairly strong for the foreseeable future.
"This remains still very much an export-led economy that relies on a very competitive currency to support the all powerful Chinese export machine," said Roach. "Until China makes the transition from relying on external, internal demand, I think they are still going to maintain tight control over the renminbi."
Roach also questioned the strength of the Chinese economy, saying Beijing's stimulus measures, in most parts, have supported the economy.
China releases its December fourth-quarter GDP on Thursday, with economists expecting the nation to return to a double-digit economic growth of 10.9%.
"This is an economy that benefited most dramatically of any economy in the world from extremely aggressive, proactive fiscal stimulus. We need to see some signs that it can stand strongly on its own apart from stimulus."