The head of the International Monetary Fund (IMF) saw no quick fix in the debate over China's currency policy on Wednesday, saying that while flexible exchange rates were desirable, so was mutual understanding.
As US and Chinese finance officials met over the currency issue, a political hot potato for the two countries, IMF Managing Director Horst Koehler told reporters in Tokyo that understanding different views on currencies was necessary.
"I do think that it is in the self-interest of China to move to more flexibility," Koehler said.
"But I feel it is absolutely inappropriate to conduct this debate mainly via the press. I think there should be a dialogue and each side should listen to the other side and hopefully then we will come to a decision which complies with mutual interests."
China pegs its yuan currency at around 8.28 to the dollar, a policy some US manufacturers say gives Chinese exports an unfair advantage in world markets and is a major factor in the mounting US trade deficit.
Their complaints have found a ready ear in a US administration looking for votes in November's presidential election.
However, Treasury Secretary John Snow, who has said he would hold China's "feet to the fire" over a commitment to change its currency regime, struck a more accommodative note in a US television interview on Tuesday.
"They accepted the proposition that they needed and wanted to move to a flexible currency arrangement," Snow said.
But he added: "They pointed out, and I agreed with them, they couldn't do it tomorrow. It's going to take some time. But they're committed to moving there."
China has resisted pressure to re-value the yuan citing concerns over the stability of the fast-growing domestic economy, but it has promised more currency flexibility in time.
The country's central bank reaffirmed its long-held position in an annual monetary policy report on Tuesday.
"The yuan's formation mechanism will be perfected and the exchange rate will be kept basically stable at a rational and balanced level," the bank said.
Koehler declined to speculate on when China should consider any changes to its exchange rate system. But in a veiled reference to the US visit, he warned against pressing for short-term solutions.
"My advice was and is to have a frank dialogue with Chinese officials," he said, so that "they can listen to the arguments why flexibility in the end is the right way to go".
"And we also need to listen to them, because they also have questions and points they have to consider. This is not a type of quick fix coming from the managing director of the IMF or any kind of delegation."
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