U.S. welcomes yuan rise so far, wants more

GUANGZHOU, China/BEIJING (Reuters) - The United States welcomes the rise in the yuan's exchange rate in recent years but wants the currency to climb further, visiting Commerce Secretary Gary Locke said on Tuesday.

However, a Chinese trade official said that despite pressure for the yuan to appreciate, the currency would probably not see a major adjustment until the country's exports improve noticeably.

"We think more progress needs to be made in that area," Locke told a news conference in Guangzhou, the capital of southern Guangdong province, which accounts for nearly a third of China's exports.

China has in effect re-pegged the yuan to the dollar since mid-2008 to help its exporters, who were hit hard by a slump in orders as the global financial crisis intensified.



Beijing revalued the yuan by 2.1 percent against the dollar in July 2005 and, over the following three years, gradually let it climb by another 19 percent before calling a halt to its rise.

"We're pleased with the movement so far, but of course more needs to be done," Locke said.

Speaking at a separate forum in Beijing, Jiang Jianjun, a deputy director with the Ministry of Commerce's Department of Foreign Trade, cited China's rising share of global output and its swelling foreign exchange reserves as pressures on the yuan to strengthen.

"However, according to our projections, until there's a noticeable improvement in exports, the exchange rate will not see a major adjustment," Jiang said.

He said it would take two or three years for China's combined exports and imports to regain pre-crisis levels.

COOPERATION ON ENERGY

The U.S. commerce chief will participate on Wednesday and Thursday in trade talks in Hangzhou, along with U.S. Trade Representative Ron Kirk and Chinese Vice-Premier Wang Qishan.

Locke said he expected the meetings to pave the way for "significant improvements and progress in the trade relationship between the two countries" when President Barack Obama visits China next month for talks with President Hu Jintao.

Locke did not delve into detail but said that energy co-operation would be a "big topic" between the two presidents, with U.S. firms seeking easier access to the potentially lucrative China market for clean energy, alternative fuels and energy-efficient products.

The yuan's exchange rate has dropped down the U.S. diplomatic agenda in the past year as Washington has looked to China for help in hauling the world economy out of recession.

The Obama administration said on October 15 that it continued to believe the yuan is undervalued but declined to declare that China was manipulating its currency.