September 20, 2010 / 4:24 PM / 7 years ago

In China's interest to reform currency: U.S. diplomat

WASHINGTON (Reuters) - It would benefit not just China, but also the global economy, if Beijing rebalances its economic growth toward domestic demand and implements a more flexible exchange rate, a top U.S. diplomat said on Monday.

Deputy Secretary of State James Steinberg said leaders need to focus "on China taking the steps, which it acknowledges that it needs to do, and which we share that view, of the need to rebalance its growth toward domestic demand and to advance and implement a more flexible and market-determined exchange rate."

"That will benefit all and will help sustain the global recovery that we all are looking forward to," Steinberg, the No. 2 U.S. diplomat, said in remarks at the Wilson Center in Washington.

Steinberg's comments followed U.S. Treasury Secretary Timothy Geithner's promise last week to rally other world powers to push China for trade and currency reforms.

U.S. lawmakers are weighing new legislation to punish China for practices they say keep its yuan currency artificially low, hurting American jobs and competitiveness, as they grow impatient with a diplomatic approach that has yielded little so far.

China has said that pressure from Washington could backfire.

China's central bank said in June it would let the yuan fluctuate more freely. Since then it has risen 1.53 percent, but many economists say it is undervalued by up to 40 percent.

Reporting by Patricia Zengerle, editing by Will Dunham

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