China let the yuan rise today to its highest level since July's revaluation but urged the US administration not to make political capital out of trade issues.
China is facing pressure to reduce its trade surplus with the United States, which Washington put at $201.6 billion in 2005 and Beijing at $114.2 billion.
Tensions are rising ahead of a visit to Washington in April by President Hu Jintao.
The US Treasury is also due to rule next month on whether China is deliberately manipulating its currency to gain an unfair export advantage. The yuan hit 8.0365 per dollar before closing at 8.0369.
It has now climbed 0.9 per cent since it was revalued by 2.1 per cent on July 21st and set free to float within tightly managed bands.
Feeling the heat from manufacturers wilting under Asian competition, Washington wants the yuan to move much more freely.
The People's Daily, the mouthpiece of the ruling Communist Party, said with an eye on the protectionist mood in the US Congress that some trade friction was inevitable as China grew.
"China is not deliberately seeking an overly large trade surplus and hopes to achieve a basic balance between imports and exports," an editorial in its international edition said.
"The Chinese and American side should look into and seek ways to reduce the trade surplus and should not politicise trade issues," the paper added.