China vows to let currency rise against dollar – all in good time
At the start of talks with US treasury secretary Timothy Geithner and US secretary of state Hillary Clinton, Chinese president Hu Jintao said the country "will continue to steadily advance reform of the yuan exchange rate".
He gave no indication when it might happen.
Most analysts in the West argue it is crucial that the yuan is allowed to rise against the dollar if the world economy is to grow in a more balanced manner.
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Hide AdFor many years, the Chinese authorities have kept their currency artificially low against the dollar, partly as a means of boosting their exports to the US. As a result, China has built up a massive trade surplus with the US.
In response to Jintao's opening remarks, Geithner welcomed the fact that China has "recognised that reform of the exchange rate is an important part of their broader reform agenda".
Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said Jintao's opening remarks were a good sign of things to come.
He said: "Positive signals coming out of Geithner's meeting in Beijing will add to risk appetite as it reduces the risk of a trade war."
However, Beijing entered the talks with its own demands and called for an end to US curbs on high-tech Chinese exports.
Beijing also pushed for Washington to simplify foreign investment rules, which officials claim unfairly hamper Chinese companies.
Both the US and Chinese officials stressed their wide-ranging common interests and pledged closer co-operation on trade, financial regulation, climate and piracy. They called for more student exchanges and other efforts to promote "people to people" ties.
The gathering brings together dozens of cabinet officials from both sides, the chiefs of both central banks and military officers. It is the second round of strategic talks, termed the Strategic and Economic Dialogue, that began last year in Washington.
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Hide AdGeithner added: "Our common challenge is to make sure that as the global economy recovers from the crisis, we are laying the foundation for strong, sustainable and balanced growth."
Yesterday's meetings focused on economic strategies and included discussion of the European debt crisis.