U.S. tells China yuan issue is of "real concern"

Washington wants Beijing to abandon a currency peg against the dollar that U.S. lawmakers say gives Chinese exports an unfair advantage in world trade and so steals American jobs.

China faced important negotiations over the yuan in coming weeks, U.S. Ambassador Jon Huntsman said, adding Washington was not alone in wanting Beijing to unshackle its currency from the 20-month-old currency peg.

"We hope to see more flexibility on the exchange rate," he told students at Tsinghua University, an elite Beijing school.

"I would be misleading you if I left you with the impression that this wasn't a very, very important issue in the United States, and will continue to be. We'll see how the next few weeks play out," Huntsman said.

The comments, as well as a demand from 130 U.S. lawmakers on Wednesday for sanctions unless China abandons the peg, did little to alter investors' expectations that the yuan will start rising gradually by the end of June.

A semi-annual U.S. Treasury report due in mid-April could label China a "currency manipulator," adding to pressure on Beijing and threatening a deepening rift between the world's biggest and third-biggest economies.

"I suspect there will be many important negotiations in the weeks ahead. This is of real concern to people in my country," Huntsman said. "Many see the trading relationship with China as a little out of balance, partially because of the currency issue."

He declined to elaborate on the nature of the talks but said the United States was not alone in wanting a stronger yuan. China has kept the currency on ice near 6.83 per dollar since mid-2008 to help its exporters ride out the global credit crunch.

"My Chinese friends like to pitch this as just an American issue. I like to say that there are many countries that feel the same way," Huntsman said.