China will not engage in a "currency war," as this will not augur well for the world economy which is still in the recovery stage.

This was declared by Premier Li Kequiang during a meeting with Christine Legarde, managing director of the International Monetary Fund (IMF) in Beijing last Monday, China Daily reported.

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In an official statement, Li said that China will not depreciate the yuan in order to boost its exports because this move would hamper the nation's goal of strengthening its economic structure.

As a strategy, the premier said that the Central Government will continue to push for reforms which aim to strengthen the yuan's exchange rate mechanism, while ensuring that the currency's exchange rate remains at a reasonable and balanced level.

There may be logic in China's decision to not itself in a currency war, as the country's debt ratio is quite low, while the country's savings rate is high.

Li added that the capital adequacy ratio of Chinese banks has also been kept at a high level, which would enable China to fend of any regional or systemic financial risks.

To bolster the global and economic system, he called on the world's major economies to improve macroeconomic policy coordination to strengthen the global economic and financial system.

In fact, the premier said that China can facilitate a dialogue with major international economic and financial institutions such as the IMF in order to boost market morale and promote economic and financial stability.

For his part, Lagarde, who attended the China Development Forum in Beijing, noted that China's recent discussions with the international community on the yuan's exchange rate, particularly on its decision not to participate in a currency war, has increased market confidence.

Over the years, analysts have underscored how the world economy has become even more interconnected, which has made policy coordination among major economies a necessity.

"The international community should strengthen dialogue and policy coordination to offset the negative spillover effect of policies devised by individual economies," pointed out Long Guoqiang, deputy director of the Development Research Center of the State Council.

China's declaration of its decision to not participate in a currency war comes on the heels of reports that the United States Federal Reserve may raise its interest rate this year, which could lead to the outflow of international capital from emerging-market economies.

Tagschina, Premier Li Kequiang, currency war, business