French President Nicolas Sarkozy said the move was "encouraging" and the European Union's executive said the expected reforms to the exchange rate of the yuan (also known as the renminbi or RMB) should have positive repercussions for the euro zone.
"The European Commission welcomes The People's Bank of China decision to proceed further with the reform of the RMB exchange rate regime and to resume the RMB exchange rate flexibility," it said in a statement.
"It considers that such a move will be beneficial for both the Chinese economy and the global economy. The European Commission looks forward to work closely with the Chinese authorities bilaterally and in the G20 to address successfully the current challenges to the global recovery."
Russian Finance Minister Alexei Kudrin also welcomed the move but said that it would not have much impact on Russia's economy or trade between the two emerging economies.
"It will not affect us for now, although on the whole it is positive," Kudrin said. "It will not affect our trade significantly."
China's announcement, which comes a week before the G20 group of the world's leading economies meets in Canada to discuss global imbalances, suggests the country is ready to break the yuan's 23-month-old informal peg to the dollar.
The decision is not likely to lead to a one-off revaluation or major appreciation in the yuan, but it will be seen as a positive move by China at a sensitive time for global finance.
Whether the announcement will be enough to placate critics, especially US lawmakers who say an undervalued currency gives China an unfair trade advantage, remains to be seen.
"This implementation of the decision will help achieve more sustainable growth in the global economy, contribute to reduce external imbalances and strengthen the stability of the international monetary and financial system," the European Commission said.
"It sends a signal of confidence on the strength of the global recovery at a time when downside risks have increased."
The Commission's statement added that it would also "entail positive effects" for the euro area.
"By enhancing the flexibility of the RMB exchange rate, the Chinese authorities are providing an important contribution to the success of the G20 Toronto Summit," the statement said.
Speaking at the same Russian forum as Kudrin and Sarkozy, International Monetary Fund Deputy Managing Director John Lipsky added: "This will be taken as a very positive move forward (by markets)."
