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The United States welcomes the rise in the yuan’s exchange rate in recent years but wants the currency to climb further, visiting Commerce Secretary Gary Locke said on Tuesday.

“We think more progress needs to be made in that area,” Locke told a news conference in Guangzhou, the capital of southern Guangdong province, which accounts for nearly a third of China’s exports.

China has in effect re-pegged the yuan to the dollar since mid-2008 to help its exporters, who were hit hard by a slump in orders as the global financial crisis intensified.

Beijing revalued the yuan by 2.1 percent against the dollar in July 2005 and, over the following three years, gradually let it climb by another 19 percent before calling a halt to its rise.

“We’re pleased with the movement so far, but of course more needs to be done,” Locke said.

The commerce chief will participate on Wednesday and Thursday in high-level trade talks in Hangzhou, along with U.S. Trade Representative Ron Kirk and Chinese Vice-Premier Wang Qishan.

Locke said he expected the meetings to pave the way for “significant improvements and progress in the trade relationship between the two countries” when President Barack Obama visits China next month for talks with President Hu Jintao.

Locke did not delve into detail but said that energy co-operation would be a “big topic” between the two presidents, with U.S. firms seeking easier access to the potentially lucrative China market for clean energy, alternative fuels and energy-efficient products.

The yuan’s exchange rate has dropped down the U.S. diplomatic agenda in the past year as Washington has looked to China for help in hauling the world economy out of recession.

The Obama administration said on October 15 that it continued to believe the yuan is undervalued but declined to declare that China was manipulating its currency.

But the Treasury Department, in a semi-annual report to Congress on currency practices of key trade partners, said China was piling up foreign exchange reserves at a rate that threatens progress in reducing global economic imbalances.

It warned that lack of flexibility in the exchange rate for the yuan might be damaging as stimulus is withdrawn and overseas demand for Chinese-made goods returns.

Currency traders in the non-deliverable forwards market were anticipating on Tuesday that the yuan would be worth 2.4 percent more against the dollar in a year’s time.

PATENT PROBLEMS

Locke said a recent spat over Washington’s decision to slap tariffs on imports of cheap Chinese tires would be discussed in Hangzhou, but he played down the issue. 

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