China would help wary financial markets and its own economy by moving to a more "market-based" exchange rate, U.S. Deputy Secretary of State James Steinberg said on May 10.
China's central bank said earlier on May 10 that it would maintain a "basically stable" exchange rate as it warned the European sovereign debt crisis was creating uncertainties about the recovery from the financial crisis.
The United States and European Union have pressed China for years to allow more flexibility to its yuan, which they argue is artificially weak and has led to a flood of cheap Chinese manufactured goods.
"These are changes that take place over time, but we need to move in the right direction to try to give the global economy and global markets confidence that we're going in the right direction," Steinberg said at the Brookings Institution.
In line with the tone from President Barack Obama's administration, Steinberg treaded carefully to avoid appearing to pressure China. He said that currency adjustment would serve China's own interests and that both President Hu Jintao and Premier Wen Jiabao have "embraced" market-based exchange rates as a general principle.
"Moving towards market-based exchange rates is a win-win because all of the economies will be stronger," he said.
"There will be stronger markets for our exports but also more sustained bases for China's own economic industries if we have balanced growth," he said.
Market analysts pored over the People's Bank of China's first-quarter monetary policy report for clues on exchange rates, with Morgan Stanley economist pointing to a word change that signaled a shift could be imminent.
Copyright Agence France-Presse, 2010