Chinese premier says yuan may not rise further against the dollar

Chinese Premier Wen Jiabao suggested Wednesday that the yuan may not rise in value against the dollar anymore, remarks that could set off a sharp rebuke from lawmakers on Capitol Hill amid an already high level of frustration. 

Congressional Republicans and Democrats have been urging the Obama administration to crack down on China's undervalued currency, which they say have cost U.S. jobs and gives the Communist nation an unfair international trade advantage. 

Wen, the nation's top economic official, said the yuan has gained 30 percent in real terms since 2005, according to news reports on his address at the end of China's legislative session.

"That shows that the renminbi exchange rate may possibly have reached an equilibrium exchange rate," Wen said. 

At the same time, Wen vowed an exchange rate system that is more flexible and market-based. 

"We welcome greater elasticity of the renminbi exchange rate," he said.

Any move by China to stop the appreciation could provide an impetus for lawmakers to pass legislation that would punish China for not letting the value of its currency rise faster against the dollar. Lawmakers have pressed the Obama administration to label China a currency manipulator, 

Instead, Treasury Secretary Timothy Geithner and other officials have opted to continue talks with China's government, which they argue have led to gradual, albeit slow appreciation. 

The Senate passed a bill in the fall but House Republican leaders and the White House expressed come concerns over the measure — mostly saying that several changes would be needed to comply with international trade laws. 

House Ways and Means Chairman Dave Camp (R-Mich.) and ranking member Sander Levin (D-Mich.), have been leaders on issue and have repeatedly pressed for, at the minimum, discussions to continue with Chinese leaders over currency, intellectual property and indigenous innovation issues. 

Meanwhile, trade advocates have urged caution in passing any sweeping measures that could put China on the defensive and in a position to consider retaliation, such as lowering prices for products headed to the United States. 

Ways and Mean Subcommittee on Trade Chairman Kevin Brady (R-Texas) has suggested that the U.S. should consider a coalition of nations to jointly apply pressure to China.

Tensions between the U.S. and China remain high — the United States, Japan and the European Union — filed a case with the World Trade Organization (WTO) on Tuesday requesting talks about export restrictions on rare-earth materials, which are used in high-tech products. 

Although Wen didn't address the case, Chinese officials have argued that reducing production of rare-earth minerals is being done for environmental reasons. 

"We hope China's growth will no longer come at the cost of resource consumption and environmental pollution," Wen said. 

During the address, he urged the U.S. and China to team up on issues such as clean energy, environmental protection and aviation.

He also mentioned investing in U.S. infrastructure on the day the Senate passed a $109 billion transportation bill. 

"China will make investment in infrastructure construction in the United States, and that will help contribute to the generation of local jobs," he said.