THE government should “break expectations” of a speedy yuan rise and stabilize the currency to avoid causing mass unemployment, a government researcher said Friday.

Fan Jianping, an economist at the State Information Center, a think tank under China’s planning agency, also said that strengthening the yuan should not be seen as a way to contain inflation, which is running near a decade high at 8.3 percent.

His views ran almost directly contrary to those expressed this month by the same think tank’s chief economist, Zhu Baoliang, who called for faster yuan appreciation to make imports cheaper and wrestle down inflation.

The divergence sheds light on how currency policy in China has become a matter of greater uncertainty and debate, after the yuan, or renminbi , rose at an annualized rate of about 17 percent in the first quarter before virtually grinding to a halt in April.

“The one-way appreciation of the yuan at present in reality means ever bigger and clearer expectations of more appreciation. This path is definitely not the best,” Fan wrote in a full-page report published in the China Securities Journal.

“So, the most important adjustment needed now is to break expectations,” he said.

Fan warned that too fast a pace would be reckless, threatening jobs in agriculture and labor-intensive manufacturing as well as the country’s less-developed regions.

Research showed a 10 percent yuan rise would swell the ranks of the unemployed by 3.8 million, he said.

China’s exporters have coped reasonably well so far with rising labor costs and a stronger yuan. Exports grew 21.4 percent in the first quarter from a year earlier.

The brisk yuan appreciation at the start of the year led many in the market to think the government was using the exchange rate to lessen price pressures after China’s leaders declared their economic priority was to tackle inflation. (SD-Agencies)