The exchange rate of the yuan against the US dollar is approaching an equilibrium after the Chinese government's reform of the currency's exchange rate regime, following steady and gradual growth, an advisor to the People's Bank of China (PBC) said on the sidelines of the Annual Meeting of the World Economic Forum in Davos over the weekend.

"This is in contrast to the dropping exchange rate for the currencies of almost all emerging economies against the dollar since August last year, which has seen the Indian rupee depreciate by over 20 percent," Li Daokui, a member of the monetary policy committee of the PBC, told Xinhua News Agency.

Meanwhile, the driving force of the yuan's appreciation - China's huge trade surplus - narrowed to $155.1 billion last year from 2010's $184.5 billion, despite its foreign trade volume for the year hitting a new high of $3.6 trillion.

"In terms of the current account balance, the yuan's exchange rate has been more conspicuously close to its equilibrium level over the past several years," Chen Xuebin, deputy director of the Institute for Financial Studies, told reporters at a press conference earlier this month.

Based on the latest figures released by the National Bureau of Statistics, the country's trade surplus accounted for around 2.1 percent of its gross domestic product last year, down from 3.1 percent in 2010 and a historical peak of 10.6 percent in 2007.

Li Daokui forecast that this will continue to slide to 1 percent this year, indicating that the reforms of the exchange system have made a positive contribution to addressing the trade surplus.

From November to December last year, the yuan's exchange rate against the dollar on the spot market touched its daily drop limit of 0.5 percent 12 times, which many analysts said signaled an end to the yuan's one-sided appreciation.

Meanwhile, Chinese banks sold more foreign currency than they bought in November and December last year, indicating a much stronger demand for foreign currency by Chinese enterprises and residents.

According to the State Administration of Foreign Exchange, November saw $800 million more foreign currency sold than bought, and $15.3 billion more in December. November was the first month to see more foreign currency sold than bought by banks since figures started being released in January 2010.

However, US Treasury Secretary Timothy Geithner said Friday in Davos that China had built its manufacturing sector at the cost of its trading partners through "systematically subsidizing" costs of key imports as well as by keeping "its exchange rate below fundamentals," according to the AFP.He also called for further rises in the value of the yuan.