China to ease capital controls to take heat off yuan

China, under persistent US pressure to revalue the yuan, plans further steps to ease capital controls to help take the heat off the currency, a senior government official was quoted as saying.

"We will continue to take a series of positive measures to loosen, appropriately, control on enterprises keeping their foreign currency," the Xinhua news agency quoted a senior official at the State Administration of Foreign Exchange as saying.

US President George W. Bush said on Thursday that China's currency policy, a key issue ahead of next year's US presidential election, was unfair and that Washington would "deal with it accordingly."

Snow carried to China complaints from US manufacturers that the yuan was too cheap at its current level, giving Chinese exporters an unfair advantage that was costing US jobs.

Bush, in an interview with CNBC, said Snow used meetings in Beijing to "deliver a strong message from the administration that we expect our trading partners to treat our people fairly -- our producers and workers and farmers and manufacturers -- and we don't think we're being treated fairly when a currency is controlled by the government."

Administration officials are considering how to step up pressure on Beijing.

Bush could raise the currency issue directly with Chinese President Hu Jintao.

They are expected to meet on the sidelines of an economic summit in Thailand in October.

Beijing has announced plans to raise the limit on the amount of foreign exchange travellers can buy from banks from next month to help ease upward pressure on the yuan.

China has already relaxed foreign-exchange curbs, including allowing some service firms to retain more forex earnings, and made it much easier for multinationals to deal in hard currency.