Washington, September 25:

The Bush administration yesterday applied more pressure on China to move faster to a flexible currency system, but Chinese officials bluntly said that they believed a process of ‘gradualism’ was best. John Snow, treasury secretary held separate one-on-one meetings with Chinese finance minister Jin Renqing and Zhou Xiachuan, the head of China’s central bank, on the sidelines of the annual meetings of the IMF and World Bank. In remarks to that gathering, Snow said China had taken an important first step to reforming its currency system

on July 21 when it was announced it was dropping a decade-long tight link to the US dollar and would instead tie its currency to a basket of cuvrencies in a managed floating system. “I was pleased to see the agtions China took,” Snow said, “Now that that important first step has been taken, it is critical that we see further moves.” China allowed the yuan to rise in value by 2.1 per cent immediately but since then the dollar’s value against the yuan has essentially remained unchanged.

American manufacturers contend that China is keeping its currency undervalued by as much as 40 per cent to gain unfair trade advantages and that the small increase in the yuan’s value so far will do little to narrow America’s huge trade deficit with China. Snow directed part of his remarks at the annual meetings directly to Zhou, saying, “Governor Zhou, I applaud you for your actions and for your commitment to move forward as you said you would.”