A large appreciation in the value of China's currency would have an unfavorable effect, Nobel laureate Robert Mundell warned Tuesday, predicting that China's housing markets would go into recession.

If there were a big rise of yuan to the dollar, that would exert a "destroying" impact on the housing markets in Beijing and Shanghai and other Chinese cities, said Mundell, a professor of economics at Columbia University at a financial forum in Beijing. He did not further explain.

Many Chinese economists also hold the view that China's unsophisticated banking system, a major source for funds for property development, could not sustain a hefty rise in the value of the yuan.

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