Published by Zeb BhamChinese policymakers should confront the prospect of an inflated yuan head-on to avoid hollowing out its export market, according to one senior economist.Writing for the overseas edition of the People's Daily, Sun Lijian, a professor of economics at Fudan University in Shanghai, said the Chinese authorities should be prepared to cede to international pressure calling for a stronger yuan - and should act early to avoid a currency shock.According to Reuters, he explained that exporters could be put under an unmanageable strain if the yuan rises too quickly, as international payments receipts would dry up rapidly."The negative shock from an appreciation of the renminbi exchange rate following an increase in its elasticity is something the Chinese government and central bank must consider," he said.The People's Bank of China acted to increase exchange rate flexibility in June this year, removing the peg against the dollar that has been in place since the start of the financial crisis.For more information on international payments, visit our Smart FX site.