UPDATE 1-China may let yuan resume rise -govt economists

BEIJING, April 6 (Reuters) - China could widen the yuan's trading band and permit the currency to resume its rise, a senior government economist said on Tuesday.

But China should be very careful about the timing of any shift, which would depend on economic conditions in China and the United States, Ba Shusong, deputy director-general of the Financial Research Institute, told a news briefing.

Ba, whose institute is part of the Development Research Centre, the Chinese cabinet's think-tank, said China would not keep the yuan pegged indefinitely to the dollar.

Freezing the rate around 6.83 per dollar in July 2008, after three years of gradual appreciation, had been a response to the global credit crunch, he said.

Ba was echoed by Zhang Yansheng, director-general of the Institute for International Economic Research, a think-tank under the National Development and Reform Commission, the powerful planning agency.

'We don't want to see our exchange rate kept unchanged,' Zhang told the briefing.

But he said currency reform would take time.

Making the yuan more flexible was a challenging task, not least because of a lack of hedging instruments in China and companies' lack of experience in handling a fluctuating exchange rate.

(Reporting by Kevin Yao; Editing by Alan Wheatley)

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