If Beijing allows its currency to appreciate, Taiwan will probably follow suit due to its economic dependence on the mainland, private economists said at a forum to discuss the trend of the yuan on Tuesday.

While experts at the forum agreed that Beijing was unlikely to revalue its currency this year, most economists see a wider trading band for the Chinese yuan as inevitable.

"Taiwan companies (in Chinese mainland) should do their best to accumulate yuan-denominated assets now, and change debts to US dollars," said Daniel Chen, senior executive of SinoPac Holdings Co.

"Once the yuan appreciates, the Taiwan dollar will follow."

With foreign reserves and exports growing rapidly, Beijing is under pressure from the United States, Europe and its Asian neighbours to revalue its currency, now pegged in a narrow range around 8.28 yuan to the US dollar.

On Thursday Chinese finance minister Jin Renqing acknowledged there was concern about the yuan but said China's fixed exchange rate had contributed to world economic stability.

However, in the long run, Beijing has promised to move towards a more flexible foreign exchange regime and analysts say the impact on Taiwan investors, who have poured an estimated $100 billion into mainland since the 1980s, would be mixed.

Taiwan electronic companies that manufacture in Chinese mainland and export their products would suffer from higher costs, but those that sell to the potentially massive domestic market could benefit as a higher yuan increases consumer spending power.

"Factories that import components and manufacture in mainland for the domestic market will benefit the most," said Kao Charng, a researcher at the private Chunghwa Institution for Economic Research.

But "the appreciation of the yuan would make the mainland market more competitive internationally, which is not good for Taiwan's ability to attract foreign direct investment."

Much of the island's electronics sector has moved to the mainland to take advantage of lower production costs.

"After the yuan rises, the cost of R&D in mainland may rise significantly and Taiwan will appear relatively cheap, causing more companies to put their research centres in Taiwan," said CK Chang, general manager of 3C Family Corp.

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