China pledged to move toward a flexible exchange rate, the US Treasury Department said Friday, hours ahead of a key meeting of the world's top finance chiefs who are expected to press Beijing to ease its currency policies.
A Treasury statement said the commitment came during a meeting here Thursday of Chinese and US officials preparing for a gathering later Friday of Group of Seven finance ministers and central bank presidents.
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.
It also noted that the US delegation "expressed support for continued efforts by the Chinese government to bring about this goal as rapidly as possible."
Renqing and the head of the Chinese central bank, Zhou Xiaochuan, are to join counterparts at a dinner following a meeting of the Group of Seven countries, Britain, Canada, France, Germany, Italy, Japan and the United States.
It will be the first appearance at a G7 gathering of senior Chinese officials and is seen as belated recognition by the major industrialised powers of China's stature in the world economy.
The United States and its G7 partners have made no secret of their displeasure with the Chinese currency's dollar peg, which they say artificially weakens the cost of Chinese exports - making them more competitive - while increasing the cost of imported goods in China.
A newly formed US labour, industry and farm alliance, the China Currency Coalition, maintains that Chinese imports in the United States are undervalued by 40 percent and US exports to China overvalued by the same figure.
US Treasury Secretary John Snow earlier this week said bluntly that he and his G7 colleagues would step up the pressure on China to let its currency float freely.
Whether or not the Chinese statement of intent Thursday will be sufficient to satisfy the G7 has yet to be determined.
Prior to the US Treasury Department statement, analysts at Commerzbank predicted in a research note that the United States would indeed announce that China was moving toward flexibility.