Timothy Geithner, the US Treasury secretary, has ratcheted up the pressure on China in the "currency wars" row that some experts say is endangering world economic recovery.
Mr Geithner, in a speech ahead of crucial meetings of the IMF, World Bank and officials from the Group of 20 leading and emerging economies in Washington, said currencies were the "central existential issue" facing the world economy.
"The main problem is that a group of developing nations are not allowing their currencies to rise," he said, risking a "dangerous dynamic" that threatened to lead to protectionism and trade wars between the biggest economies. "It's unfair on countries that are already running more flexible regimes and let their currencies appreciate."
Mr Geithner's remarks follow a warning from Wen Jiabao, the Chinese premier, to EU countries not to get involved in any US-led measures to force China to let the yuan appreciate against other currencies. He said the EU should not "join the choir" against China's policy of allowing the currency to appreciate gradually.
"If we increase the yuan by 20 to 40 per cent, as some people are calling for, many of our factories will shut down and society will be in turmoil. If China's economy goes down, it's not good for the world economy," Mr Wen said.
China has continued to buy dollars and dollar-denominated debt while the yuan has remained low. IMF officials also called for greater currency flexibility.
