China knows yuan move in its interest, Biden says

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Separately, a U.S. Treasury Department official said the Obama administration does not expect China to switch overnight to a freely floated currency but should let the revaluation process proceed more rapidly than it has done.

"China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country," Treasury Assistant Secretary Charles Collyns told a meeting of the German Marshall Fund.

"These policies have the effect of keeping the Chinese currency substantially undervalued," he said.

The United States has been pushing for years for China to let the value of its yuan currency CNY= rise more rapidly. Critics -- especially on Capitol Hill and among U.S. manufacturers -- argue that an artificially undervalued yuan boosts China's exports to the United States and crimps the ability of U.S. firms to sell their goods in China.

The yuan has risen about 3.7 percent against the dollar since June when China announced it was loosening its grip on the currency. Taking into account China's high inflation, the real effective exchange rate has risen even more.

SOME LAWMAKERS HOPEFUL

Collyns said the United States recognizes that it would be difficult for China to immediately float its currency but repeated that it should be permitted to move more flexibly in response to market forces."It's a process ... that needs to work smoothly," he said.

U.S. lawmakers apparently muted their concerns about China's currency policy during Thursday's meetings with Hu. Members of the U.S. House of Representatives skipped the currency question, but an aide said Senate Majority leader Harry Reid raised it in his meeting with Hu. For details, see [ID:nN19294126]

Senate Foreign Relations Committee Chairman John Kerry said that he expects China to let the yuan rise further.