China said Tuesday the exchange rate of its currency was not a "magic remedy" that could resolve the US trade deficit, in a dig at accusations it keeps the yuan undervalued to support its exports.
"The rate of exchange of the yuan is not the main reason for the US trade deficit, and it is not a magic remedy to resolve the problem of the trade deficit," foreign ministry spokeswoman Jiang Yu told reporters.
Her remarks came ahead of the June 17-18 meeting of the high-level US-China Strategic Economic Dialogue, which is expected to touch on rising inflation and the thorny issue of the Chinese yuan.
The largest US trade deficit is with China, a politically sensitive issue as critics in Washington accuse Beijing of keeping its currency undervalued to support exports.
Jiang said China would continue to steadily promote the reform of the yuan exchange rate mechanism.
China abandoned a currency peg in July 2005, and since then it has appreciated 17.5 percent against the dollar, but the United States argues this is not enough.
But Jiang said China was considering US concerns about the impact of the yuan on its trade deficit.
"China is seriously considering the concerns of the US side, and we are ready to make joint efforts with the US to promote mutually beneficial trade between the two people," she said.
