China committed to move 'steadily' toward flexible exchange rate

WASHINGTON (AFP) - China vowed to move "firmly and steadily" toward a flexible exchange rate during a meeting of Chinese and US officials in Washington Thursday, the US Treasury Department said in a statement.
The Chinese delegation, led by Finance Minister Jin Renqing, "reaffirmed China's commitment to further advance reform and to push ahead firmly and steadily to a market-based flexible exchange rate, and described the steps the Chinese government has taken to create conditions to establish a more flexible exchange rate," the statement said.
The United States and its G7 partners had maintained that the Chinese currency, pegged to a weak dollar, makes foreign goods too expensive -- and thereby less competitive -- in China, while leaving Chinese exports unfairly cheap in foreign markets.
Some analysts have said a free-floating yuan could boost US exports and thereby help reduce Washington's massive current account deficit, which IMF Managing Director Rodrigo Rato has characterized as a threat to the world economy.
Rato had said earlier that China should take advantage of a growth rate expected to hit nine percent this year to allow greater flexibility in its exchange rate mechanism.