A strong yuan appreciation could hinder Chinese and global growth and cause interest rates worldwide to rise, economists said, ahead of the G20 summit.

Policymakers of the G20 will meet in Seoul on Thursday and Friday for the summit, which is expected to center on coping with global economic imbalances and lowering the chances of a currency war.

In a written reply to a French newspaper, President Hu Jintao highlighted four issues on which China would like to focus during the summit, including sustaining global economic recovery, pushing forward international financial reform, and resisting trade protectionism.

Although the United States has been putting pressure on China to allow its currency to rise and pledged to bring the topic to the G20 meeting, many economists believed China's currency issues will not be in the spotlight, especially since the US launched loosening monetary policies.

A new Bertelsmann Foundation study, entitled Rebalancing the Global Economy, warned that placing the burden of correcting trade imbalances solely on China ignores the more complex reasons behind large current-account surpluses and deficits, and threatens to aggravate an already-fragile global economic situation.

Instead, the US and Europe need to work with China and all three should implement policies to correct imbalances.

The report also argues that the numerous origins of today's global imbalances mean an appreciation of the yuan alone would produce little of benefit, and could be counterproductive. The authors note that a much stronger yuan would depress Chinese exports and, subsequently, the availability of Chinese capital, which has helped keep interest rates low and spur growth.

At a press briefing, Vice-Foreign Minister Cui Tiankai rejected attempts by the other nations to set targets for yuan appreciation and current account balances.

The Chinese government initiated foreign exchange reform in June, ending a two-year peg to the US dollar. The yuan has gained by more than 2 percent since then.

Zhong Wei, professor of finance at Beijing Normal University, said although few G20 nations will join the US stance on yuan revaluation, this does not mean they will not be concerned about the issue.

During a meeting of G20 finance ministers and central bank chiefs in Gyeongju, South Korea, US Treasury Secretary Timothy Geithner proposed the ratio of surplus and deficit on the current account of a nation's GDP should be set at 4 percent.

The proposal was, however, widely opposed and the member nations finally reached a consensus on "moving toward more market-determined exchange rate systems that reflect underlying economic fundamentals, and refraining from competitive devaluation of currencies".

At the same time, quantitative easing measures in the US have raised global concerns.

Earlier this month, the US Federal Reserve Board announced it would issue money to buy $600 billion in long-term bonds to further stimulate the US economic recovery, but this has stirred concerns that the move will lead to rising inflation and asset bubbles.

After the announcement, policymakers from emerging economies expressed their displeasure and called for action to curb unwanted capital inflows.

Zhou Xiaochuan, China's central bank governor, said it may not be a good policy for the global economy, although China understands that the US expects to revive the recovery by implementing more monetary easing.