The top US diplomat in China says Beijing's move Saturday to allow a more flexible exchange rate for its currency has removed an "irritant" in Sino-US relations. But Ambassador Jon Huntsman says there has yet to be progress in restoring military ties.
"It's a genuine attempt by China to address its exchange rate mechanism. It takes an irritant off the table in US-China relations," Huntsman said.
He said a stronger yuan would increase U.S. exports to China and help spur job creation in the United States.
"When you start to consider that every billion dollars in exports creates 22,500 jobs, that's a very big deal at a time when we're facing high rates of unemployment," the ambassador said.
China fixed the value of the yuan in July 2008 to prop up its exports as global demand began to falter because of the global economic slowdown. On Saturday, China said it will let a basket of currencies determine the value of the yuan.
The US and China's other trading partners argued that the peg made Chinese exports unfairly cheap and resulted in job losses in these markets. The US has repeatedly pressed China for a more flexible exchange rate to address the imbalance.
Asian stocks rallied Monday on the currency news.
Huntsman said that despite recent progress in Sino-U.S. cooperation, including over sanctions against Iran, there remain some stumbling blocks.
"As yet there is no sign of real progress in the military relationship," Huntsman noted. "It's the one end of our relationship that is seriously lagging. It would continue as it is for a bit longer."
China suspended military exchanges in January in apparent anger over US arms sales to Taiwan. China considers the island part of its territory.