US Treasury Secretary John Snow said this Wednesday during his visit in London, adding that China's announcement last month that it was raising two key interest rates for the first time in more than nine years represented the latest example of efforts by the Chinese to move toward "a more systematic management of monetary policy", China Radio International reported Thursday.

"I believe that these actions represent significant steps consistent with China's move to a flexible and market-based exchange rate," Snow said in remarks prepared for the Royal Institute of International Affairs in London. Copies of the speech were released in Washington.

For more than a year, the Bush administration has been pressuring China to stop linking its currency at a fixed rate to the U.S. dollar, which American manufacturers contend has resulted in the Chinese currency being undervalued by as much as 40 percent. That, in turn, gives Chinese products a tremendous competitive advantage against American goods.

The Chinese have said they want to move to a more flexible currency system but cannot until they make a number of reforms to the country's financial system.

While the United States is pushing for a stronger Chinese currency in relationship to the dollar, Snow said there had been no change in the administration's support "for a strong dollar. Our dollar policy remains unchanged because a strong dollar is in both the national and international interest."

Snow's trip to Europe comes as the dollar has fallen to record lows against the euro, the common currency of 12 European nations.

Many analysts believe the administration has decided to voice support for a strong dollar to avoid rattling currency markets but to refrain from intervening to brake the dollar's fall since a weaker dollar will help lower the U.S. trade deficit.

In London, Snow called U.S. efforts to change China's currency policy one of three major initiatives the administration is pursuing in an effort to lower the record U.S. current account trade deficit. The other two elements are to boost the U.S. savings rate, and to encourage stronger economic growth in other major industrial countries.

Source: CRI news