US wants more currency loosening from China

China had long held a tight rein on the yuan, and effectively pegged its currency at about 6.8 to the dollar since mid-2008 to support exporters during the global economic crisis.

The People's Bank of China pledged on June 19 to let the currency trade more freely against the greenback, though it ruled out any large fluctuations. The yuan has appreciated 0.7 percent since the highly anticipated announcement.

“After a long period of pegging their currency to the dollar... they have now started to allow it to move upward again to appreciate, to strengthen their response to market forces,” Geithner said in an interview with the ABC News program “This Week” which aired Sunday.

But the Treasury chief appeared intent on exerting renewed pressure on China by saying the administration of U.S. President Barack Obama was more interested in how far Beijing was willing to let the currency strengthen.

“It's just the beginning, and what matters to us and to all of China's trading partners is that they let that currency appreciate,” Geithner said.

“What matters to us is how fast and how far they let it go.”

Some critics, including U.S. lawmakers, say the currency is undervalued by as much as 40 percent, giving Chinese exporters an unfair trade advantage.

In early June, shortly after his May visit to Beijing and just days before China's currency announcement, Geithner slammed the yuan's undervaluation as an “impediment” to global economic reforms.

Despite pressure from U.S. lawmakers to get tougher with Beijing, Geithner has consistently stopped short of directly accusing Chinese authorities of currency manipulation.

On Sunday he said he was “absolutely” sure that Beijing was not manipulating the yuan now.

“But again, they begin the process of letting it start to reflect market forces. That's very good for China. It's very good for the United States.”

Last Wednesday, Chinese central bank adviser Zhou Qiron told Japanese newspaper Asahi Shimbun that China could actually let the yuan weaken against the dollar if overseas shipments falter significantly.

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