BEIJING (Reuters) - Chinese official media on Monday welcomed the relatively mild line on the yuan currency from a G7 meeting as vindication for its policies, while continuing to pillory Buy American provisions in U.S. rescue plans.

Chinese government officials have so far avoided public comment on the Group of Seven industrialized nations meeting on the weekend that praised China's fiscal measures and continued commitment to move to a more flexible exchange rate.

The statement from the meeting in Rome was mild compared with a G7 statement in October that encouraged China to allow the yuan currency to appreciate.

Against the U.S. dollar, the yuan has recently been trading about even with levels seen in October.

Comments in the Chinese-language Financial News, official paper of the country's financial institutions, suggested Beijing liked what it heard and could use the latest G7 comments to push back against claims that it manipulates the yuan to gain an advantage in trade.

The paper said the G7's position was a big turnaround from past criticism of China's yuan policies and showed that the United States and other rich economies know they need Beijing's cooperation to help pull them out of an economic slump.

A range of signs indicates that China's role in withstanding the crisis is harder and harder to ignore, said the paper.

Beijing's relatively sound economy forced the Western powers to draw back from criticism, the paper added.

China's relative economic robustness, the relative stability of its financial system, relative ampleness of its state finances, and massive potential of its domestic market demand mean they cannot make an enemy of China.

The G7's milder tone appeared to be an effort to repair damage from a spat over recent Washington comments that Beijing was manipulating its exchange rate.

But official Chinese press continued to criticize the Buy American requirement of the U.S. economic stimulus package.

The U.S. Congress approved a $787 billion plan to jump-start the world's biggest economy on Friday, stipulating that public works and building projects funded by the stimulus use only U.S.-made goods, including iron and steel.

The overseas edition of the People's Daily, the newspaper of China's ruling Communist Party, said the requirement was dangerous protectionism, and said that more such steps may come.

It can be asserted that this tide of trade protectionism will continue for some time, especially in the United States, said the paper. China must seek a bigger say in setting the rules of trade, it said.

China's official Xinhua news agency on the weekend already slammed the Buy American requirement as a poison.

Without specifically addressing the U.S. stimulus plan, commerce ministry spokesman Yao Jian told a news conference on Monday that Beijing was deeply concerned about protectionism.

We are against any form of trade protectionism and propose to solve international trade problems through cooperation and discussions, Yao said. We think trade protectionist measures will escalate the already serious economic situation under the financial crisis.

(Reporting by Chris Buckley and Langi Chiang; Editing by Nick Macfie and Ken Wills)

China