US warning over yuan

The US has warned that China must adopt a market system or risk losing its ability to control its economy.

Henry Paulson, the US Treasury secretary, said China should adopt flexible currency exchange rates.

"China faces several critical, immediate challenges," he said in an address at the Treasury.

His remarks appeared to set the stage for a key trip to China next week after weekend sessions in Singapore with world financial leaders at the annual meetings of the International Monetary Fund and World Bank.

He insisted he would oppose protectionist measures in Congress such as tariffs against Chinese-made imports.

The US and European governments will use the IMF and G7 meetings to press China to allow its currency to appreciate, thus increasing the price of its exports. But Beijing is likely to point to new figures showing that recent measures have had an impact.

- INDEPENDENT