US Treasury Secretary Timothy Geithner on Thursday urged China to allow further appreciation of its yuan currency against the dollar at the start of talks between the world's two biggest economies.
"A stronger, more market-determined renminbi (yuan) will help reinforce China's reform objectives of moving to higher value-added production, reforming the financial system, and encouraging domestic demand," Geithner said, according to a transcript released before he spoke.
US officials have long accused Beijing of keeping the value of its currency artificially low to boost exports, leading to a massive Chinese trade surplus with the United States.
But Beijing defends its exchange rate regime, saying it is moving gradually to make its currency more flexible. Last month, China loosened some controls over the yuan by allowing the unit to trade in a wider range.
Speaking at the annual Strategic and Economic Dialogue, Geithner said China should move forward with economic reforms, including allowing more foreign competition, saying it was important to the United States.
"In China, you are in the process of exploring the next frontier of economic reforms, recognising as your predecessors did more than 30 years ago that future economic growth will require another fundamental shift in economic policy," Geithner said.
"The United States has a strong interest in the success of these reforms, as does the rest of the world," he said, according to a transcript.
Such reforms included relying more on domestic consumption than exports to drive the world's second largest economy, allowing private firms a greater role than state-owned giants and modernising the financial system, he said.