Arguments over revaluation of the ''renminbi,'' the Chinese yuan currency, are heating up.

Japan and the United States make criticisms that China exports unemployment and deflation to them by holding the country's exchange rate at a low level against the dollar. China rebuts their criticism by saying that the stability of the Chinese currency is a major plus for the world economy.

Will an appreciation of the yuan serve the national interests of Japan and the United States? Furthermore, are we now in an environment where China can revalue its own currency? I would like to discuss this subject in terms of these two aspects.

I recently carried out a survey over the opinions concerning the currency issue of U.S. government officials and economists. This showed that most forecast that demand for the yuan's appreciation would become louder as next year's U.S. presidential election draws nearer. On the other hand, none of them thinks that a revaluation will serve the national interests of the United States.

Moreover, there is a prevailing view among experts that the currency issue stems from U.S. domestic concerns, with the revaluation demand being intended to divert people' s attention from Washington's inability to deal with its domestic economic problems.

Imports of goods from China by both Japan and the United States equate to only one-plus percent of their own gross domestic products. When this single fact is taken into account, it is not a rational argument to attribute their deflation problems to exports from China.

Industrial movement in developed countries is to more advanced sectors, with developing countries taking over the industrial fields left vacant by advanced nations. This horizontal international specialization (division of industries) has become a major trend in the global economy, under which criticism of ''the export of unemployment problems to foreign countries'' has no validity.

Furthermore, more than half of China's export goods are produced by foreign-affiliated companies, as well as which more than half of the raw materials used in exported products are imported into China. If China's exports were to become sluggish as a result of an appreciation of the yuan, this would have a major impact on foreign-owned companies operating in China.

What effect would an appreciation of the yuan have on China? The country has a major weakness which is that, even though growth is continuing, there is an economic imbalance. This is symbolized by the high dependence -- twenty six percent in 2002 -- of its gross domestic product on exports.

The Chinese government implemented a policy of expanding domestic demand at the cost of creating a huge public financial deficit. Yet, the vested interest class which is mostly in coastal areas and which represents only 20 percent of the country's population, exclusively enjoyed the fruits of the economic growth generated by government policy.

The government has failed to create a big domestic market for general consumers. The income of the vested interest class has reached the level of developed countries but only the markets for real estate and luxurious goods have prospered.

Thus, although China has achieved a substantial production capability as the result of investment, including foreign capital, it still has to seek foreign markets. It is an economic reality that China cannot extract itself from its dependency on exports.

Lacking a substantial domestic market, a yuan revaluation-led export curb would be a major blow for the Chinese economy and would generate confusion in society. Moreover, there is also a sizable concern that it would create instability in the world economy.

It is inevitable that the yuan will in the long run be traded under a floating rate system. However, it can be said that maintaining the current rate is a wise choice for the time being.