Related readings:  China pledges more yuan flexibility  RMB banking deposits continue to slow down  Wu outlines China's economic goals for US  Appreciation of yuan will not reduce US trade deficit

The Bush administration did say that "more flexibility in China's exchange rate will help it achieve more balanced growth" and "promote a number of other outcomes that would be economically beneficial."

But in the report it is required to deliver to Congress every six months, the administration said that no country met the "technical requirements for designation" as a currency manipulator.

Such a designation could trigger negotiations that could ultimately lead to trade sanctions.

The latest report was released four days after a Cabinet delegation led by Treasury Secretary Henry Paulson concluded high-level talks in Beijing aimed at resolving the root causes of America's huge and growing trade deficit with China.

China's trade surplus with the United States grew to US$102.2 billion in the first nine months this year. But the US Government predicts the imbalance is on track to surpass last year's record US$202 billion based on a different set of calculation methods.

The report, which elaborated on Beijing's exchange rate regime reform, said China "took further steps to reform the currency market and (yuan) flexibility increased compared to the last six months of 2005."

The yuan has strengthened about 5 per cent since Beijing dropped its peg to the US dollar in July last year, switching to a mechanism that sets the exchange rate on a basket of world currencies.

It was trading at 7.8198 to the US currency yesterday.

But the report noted that Chinese currency reforms so far have been "considerably less than is needed" to rebalance world trade.

The report, which was scheduled to release in November, was put off because of the US mid-term election and the Sino-US strategic economic dialogue.

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