International anxiety over China's currency exchange rate policy appears to be gathering momentum again, given that the yuan has risen only slightly since June 19 when the People's Bank of China (PBOC) made it more flexible.

Though the recent global economic uncertainty warrants some caution, it is vital that the yuan rises more steadily over time in order to address economic imbalances and international reactions both. China's exchange rate policy should, however, focus more on a basket of currencies, de-emphasizing the bilateral exchange rate against the US dollar.

To start with, expectations of a sharp rise in the yuan by international investors and foreign policymakers were unrealistic. Although the central government is determined to make the exchange rate more flexible, it has never given the impression of a drastic revaluation of the yuan.