China has made progress toward preparing the ground for a flexible yuan currency but the United States is not yet satisfied, US Treasury Secretary John Snow said on Tuesday. "We've made it clear to them that they need to move to a flexible exchange rate, to let the market set the currency rather than do it through administrative fiat," Snow said during lawmaker questions before a hearing at the House of Representatives Ways and Means Committee.
He said Beijing had agreed on the need for currency flexibility. "But they can't move to it until they modernise the financial infrastructure of the country," Snow said. "They are making great progress. We are not satisfied but they are making great progress."
Snow cited a mid-2004 agreement between China and the Chicago Mercantile Exchange to develop a currency derivatives market, a deal Treasury hailed at the time as a step toward uncoupling the yuan from the US dollar.