German Economy Minister Wolfgang Clement said on Monday that a deliberately low exchange rate for the Chinese yuan was keeping prices of China's own goods artificially low but was not a sustainable policy.
"In the medium term, it's not attractive for China and cannot be financed," he told reporters on the sidelines of an event in Berlin.
Clement also said China's heavy consumption of basic commodities as its economy has surged ahead - a major factor in the recent surge in crude oil prices - had placed the world economy under pressure.
Western governments have pressed China to allow its yuan to appreciate against other currencies, saying Beijing's policy of keeping the yuan pegged against the dollar was making Chinese exports artificially cheap.
For western export nations, the problem has been exacerbated because other Asian countries have followed China's lead to ensure their industries are not undercut by the lower yuan.
China has said it plans to put in place a market-based currency system to create conditions for making the yuan, now pegged at around 8.28 to the dollar, more flexible, but has given no timetable and does not want to be rushed into action.
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