The US is keeping up pressure on China to let the yuan climb as Beijing disclosed it was sounding out exporters on whether they could cope with a stronger exchange rate.
China faced important negotiations over the yuan in coming weeks, US Ambassador Jon Huntsman said, adding that Washington was not alone in wanting Beijing to unshackle its currency from a 20-month-old peg against the dollar.
The currency debate has turned acrimonious, with 130 US lawmakers demanding sanctions unless China gives up what they see as an unfair competitive advantage by allowing the yuan to rise.
A semi-annual US 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 US 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.
Dominique Strauss-Kahn, the managing director of the International Monetary Fund, yesterday restated the fund's long-held view that the yuan was undervalued.
Chinese officials have given no ground, saying they will not waver in sticking to a stable exchange rate while asserting that their nation is being made a 'scapegoat' for the US' own economic woes ahead of Congressional mid-term elections.
Qin Gang, a Foreign Ministry spokesman, said US demands for a stronger yuan were unfair and harmful to Sino-American ties. Resolving such trade frictions 'requires that both sides be calm and rational', Qin said.
A stronger yuan would spell the end for many Chinese exporters in labour-intensive sectors such as garments and furniture, a semi-official trade group said.
'If the yuan rises, these companies will face the immediate risk of going bust as their profit margin is already very narrow,' said Zhang Wei, vice-chairman of the China Council for the Promotion of International Trade.
While external pressure on China to push up the yuan is intense, domestic pressure to hold the currency down is even greater, Zhang said. The council members include the country's biggest exporters.
He said his group was checking with more than 1,000 exporters on whether they could cope with a stronger exchange rate.
