Geithner set for talks on yuan during visit to China

US Treasury Secretary Timothy Geithner is due in China for talks with Vice-Premier Wang Qishan to discuss a long-running dispute over the yuan.

The last-minute visit comes as the US tries to persuade China to allow its currency to trade more freely on foreign exchange markets.

The US has accused China of keeping the yuan artificially low, making it hard for US exporters to be competitive.

There are signs that China may be softening its stance on its currency.

Conciliatory gesture

Mr Geithner has been visiting India and flew to Hong Kong on Wednesday evening. He is due to fly to Beijing later on Thursday.

While in India, the Treasury secretary said he was confident that China would decide a more flexible yuan was in its own best interests.

The White House also reaffirmed its desire on Wednesday to persuade China to embrace a more flexible currency in a concerted effort to push for some kind of resolution to the long running dispute.

The US is talking tough but also making conciliatory gestures towards China.

Last weekend, the US Treasury delayed the publication of an official report on whether China manipulates its currency.

Mr Geithner said he would delay the report, which was due on 15 April, until after a series of G20 and bilateral meetings with China.

The yuan will also be on the agenda next week when President Barack Obama meets his Chinese counterpart, Hu Jintao, on the sidelines of a nuclear summit in Washington.

Trade imbalances

There are some signs that the US's efforts to persuade China may be rewarded.

Zhu Baoliang, chief economist at the State Information Centre, a government think-tank, said: "Regardless of how much pressure the US puts on China, we cannot let the yuan float. What we can do is depeg the yuan from the dollar."

This compromise measure would make the yuan more flexible.

Many observers see the yuan as key to addressing trade imbalances that are destabilising the global economy.

A weak yuan means China can export goods cheaply, allowing the country to run a huge trade surplus.

The US, along with most developed western economies, imports much more than it exports, leading to a massive trade deficit.