China said it reached an understanding with the United States on the demand for appreciation of its currency, the yuan, under which it would chart its own course on currency reform based on its needs.
"China and the US have reached consensus that the US understands that China will independently decide on the specific steps of its exchange rate reforms, based on its own interests, taking into account world economic conditions and China's own development trends," China assistant finance minister Zhu Guangyao said.
He made the comments after conclusion of the two-day strategic and economic dialogue between the two countries in Beijing on Tuesday, in which US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner took part.
In his closing remarks, Geithner welcomed a pledge by China's top leaders to pursue currency reform as part of a broader agenda aimed at boosting domestic consumption and helping rebalance global growth.
"This is, of course, China's choice," he said. Geithner said he was 'as confident as I've ever been' that China will see that it is in its own interest to let appreciation of the yuan resume, to help curb inflation for example.
Chinese President Hu Jintao said on Monday during the opening ceremony of the dialogue that China will continue to 'steadily push forward the reform of the foreign exchange rate mechanism, under the principles of independent decision-making, controllability and gradual progress.'
The remarks sparked market speculation that the government will let the currency rise in the near future.
"Thanks to the global economic situation, China is facing less global pressure on currency revaluation and now is the opportune time to widen the band of currency flotation and to make the yuan more flexible against the dollar," China Daily quoted Zhang Ming, an economist at the Chinese Academy of Social Sciences.
As part of the outcome of the dialogue, China also 'agreed to submit a revised agreement on government procurement by July', he said.
