The consensus of the economic pundits is that Beijing, having cleverly pre-empted both the US administration and the IMF by announcing that it was reverting to a more flexible yuan, now feels confident that it can dominate the international debate over the currency. The IMF staff report on China gives no figures for the extent the fund believes the yuan is undervalued. Reports say they were in the document but Beijing successfully argued for their deletion.

The report offers a good summary of the giant strides China has made, both in its recent economic development and particularly in its swift and aggressive response to the global financial and economic crisis. It also offers a brisk outline of the immense challenges ahead.

It is worth outlining some of these:

Gradually withdraw the fiscal stimulus while continuing to expand fiscal support for consumption.

Continue to withdraw monetary stimulus to return credit growth to more normal levels and to create a greater role for interest rates, open market operations and reserve requirements.

Maintain supervisory and regulatory vigilance to manage deterioration in credit after its expansion last year.

Increase transparency and information about local government financing and enforce the prohibition of local government debt guarantees.

Use prudence in the real estate market to prevent bubbles, including introducing a property tax and raising the cost of capital.

Use the renewed exchange rate flexibility to permit an appreciation of the yuan in real effective terms.

Develop a broader range of financial markets and investment products to raise household capital income, offer households alternative investment and insurance products and lessen the demand for physical assets, notably housing, as a store of value.

Sustain the progress in building the social safety net, especially in health, education and pensions.

This is a long and complicated list of sometimes competing demands for a large country.

The report nevertheless is a strange document, where the confidence of the IMF staff is interrupted at two critical points by a dissenting view. One concerns the value of the yuan, which the IMF says 'remains substantially below the level that is consistent with medium-term fundamentals'. Later, the IMF claims that 'the current undervaluation ... acts as a headwind to increasing private consumption'.

But the confidence of the IMF staff is rudely interrupted by the intrusion of Beijing's comment that the yuan is 50 per cent stronger than when the exchange rate was unified in 1994 and 22 per cent higher than its 2005 lows.

Behind the disagreement on the currency is an argument about China's current account surplus. IMF staff believe the recent sharp fall in the surplus will be reversed. Two computer models predict an increase in the surplus to between 8 and 9 per cent in two years. The IMF staff say they 'assume a more moderate increase in the current account' because of policies adopted this year and last.

Beijing strongly disagrees and says so in the report. It expects 'that the current account surplus will settle at about 4 per cent of GDP over the medium term', citing continuing fast growth, rising wages, structural reforms 'and the recent appreciation of the currency' - though the last point is a matter of dispute.

The yuan has hardly moved since Beijing's decision to adopt a more flexible policy, and there are still powerful Chinese who advocate depreciation if China's export juggernaut looks like stalling.

It is a surprise to find views contrary to those of the IMF staff intruding into their report. There is nothing inherently unhealthy about debate and disagreements, especially since China is a complex country with a multitude of problems stemming from its very success. But Beijing's contrary arguments on the yuan and the current account might have been more convincing if backed by argument and economics rather than assertions and rhetoric.

What should be of concern is that the debate has evidently become politicised. In the public information notice accompanying the release of the IMF report, there was disagreement within the fulsome praise of China's economic achievements.

After a string of statements that 'directors commended China's proactive and decisive policy' and other praise, there came this jarring note: 'Several directors agreed that the exchange rate is undervalued. However, a number of others disagreed with the staff's assessment of the level of the exchange rate, noting that it is based on uncertain forecasts of the current account surplus.'

The executive directors are the government representatives, the shareholders in the IMF. Given that few of them are economists capable of judging the merits of the respective arguments, this suggests political lobbying by Beijing.

This is a potentially dangerous trend, especially when developing countries in general and Asians in particular are arguing for better representation in global financial bodies like the IMF. There is an argument making the Washington rounds that it is 'Asia's turn' to supply the next managing director of the IMF when Frenchman Dominique Strauss-Kahn departs.

The danger is of blurring the lines between professional competence and political interference. It is of the utmost importance that the head of the IMF should be the best person for the job irrespective of nationality and that the staff be professional financial bureaucrats and economists whose allegiance is to the IMF and the global economy and not to their national governments when assessing member states' economies.

The IMF is certainly not infallible: its staff have made their share of mistakes, particularly in not understanding social and political repercussions of their recommendations, which arguably exacerbated the hardships of the 1997 Asian economic crisis.

So let a million arguments range over the economic wisdom and the social implications of IMF prescriptions, but keep the politics out. It has been bad enough that the US Treasury has tried to strong-arm the IMF without China now trying to capture it.