Weaker yuan not in China's best interests, China's Fang says

A weaker currency is not in the best interest of the People's Republic of China, one of the Asian giant's top officials told a panel at the World Economic Forum in Davos, Switzerland.

Speaking on Thursday from the Swiss alpine town, Fang Xinghai, the vice-chairman of China's securities regulator, said there was no "basis" for China to desire such an outcome.

“Currency depreciation is not in the interest of China. It’s not good for domestic consumption," he said.

He also cautioned on becoming fixated on a few days' worth of moves in the currency, the yuan, although he admitted that Beijing's communications policies could have been better.

"China used to have a crawling peg [versus the dollar] the stated goal is to move towards a basket approach.”

“We should not focus on a few days’ movement [in the yuan]. Moving towards a basket approach is the decided policy… the rate will be quite stable,” Fang said.

Fang also stressed the ability of Chinese authorities to learn quickly so as to improve its policies.

“Our system is not structured in a way to communicate seamlessly with the markets. You bet we can learn."

The regulator also emphasised how the economy had successfully shifted towards consumption and away from investment over the last five years, although he admitted the process could have been quicker.

Sitting on the same panel as Fang was Christine Lagarde, the International Monetary Fund's Managing Director, who voiced her opinion that China would rise to the challenges its economic transformation posed.

"It is a massive undertaking... but I have no doubt it will happen,” Lagarde said.