Japan's finance minister joined his US colleague's call for more flexibility in the Chinese yuan's exchange rate ahead of a meeting with their global counterparts next week, although he sounded a slightly more conciliatory note.
Japanese Finance Minister Sadakazu Tanigaki said on Friday he was closely watching what China does with the yuan's new managed-float exchange rate system, repeating his standard line that more flexibility was desired but more time was needed for Beijing to make significant moves.
"Yes, but China's economy is growing rapidly and it has to think of various factors in managing its economy, and it may take some time for it to get used to the new foreign exchange management policy," he told a news conference.
Compared with a more direct call for flexibility by US Treasury Secretary John Snow, Tanigaki's remarks were relatively low-key out of concern that trying to push China too hard could be counterproductive.
But he said foreign exchange would be a topic at a meeting on Monday with Snow, who said on Thursday he would tell Chinese officials that Beijing needs to permit more currency flexibility.
Both ministers are to visit China next week for a meeting with their Group of 20 (G20) counterparts after holding a bilateral meeting in Tokyo.
The G20 meeting takes place amid mounting speculation about what steps China might take after dropping the yuan's decade-old peg to the US dollar in July and adopting a so-called dirty float system referenced to a basket of major currencies.
Despite the move to a new currency regime, the yuan has barely risen against the dollar since then, fuelling concern about the ballooning US trade deficit with China.
"We will be meeting with the Chinese authorities, the economic policy and political leadership, to make the case that it's time to see greater flexibility," Snow told the US Senate Finance Committee on Thursday.
"The commitment has been made, the initial step was made, but we need to see more flexibility incorporated into the currency reflecting real demand (and) supply markets," Snow said.
At that session, Snow was pressed on whether China risked being named a currency manipulator in a Treasury report expected in early November.
Treasury's most recent such report, released in May, found that no country used foreign exchange to gain an unjust edge in the latter half of 2004 but pointedly warned that China could be named a manipulator if it did not end its currency peg.
Many US lawmakers feel China's move in July was too little and blame America's mounting trade deficit on what they term unfairly cheap Chinese-made imports into US markets.