China has not set a timetable for loosening the Chinese currency's peg to the US dollar, Zhou Xiaochuan, governor of the People's Bank of China, said.

　　During his visit to the United States on Friday, Zhou said he discussed relaxing Chinese foreign exchange controls with US Treasury Secretary John Snow.

　　"We ... discussed our technical cooperation to improve financial markets, including foreign exchange markets, in China," Zhou told reporters as he left the US Treasury after a meeting with Snow.

　　"We discussed Chinese banking system reform, especially ... for commercial banks, and relaxation of foreign exchange controls in capital accounts," he said.

　　"Two of these matters, commercial bank reform and relaxation of capital account, (are) to some extent related to the direction in which we will also gradually improve our foreign exchange rate formulation mechanism in the future," he added.

　　Asked if he had talked about a timetable for relaxing China's currency peg - in place since the mid-1990s - he said this was not on the table and that any discussion of revaluation was for "the next round." US manufacturers hope to see a stronger yuan so as to make Chinese-produced products artificially expensive on the overseas markets.

　　With the Chinese currency's appreciation, the American manufacturers would gain an edge over the Chinese goods.

　　The us Treasury chief praised Zhou for his efforts to reform China's financial markets, a US Treasury spokesman said.

　　"The secretary commended the efforts underway to modernize China's financial markets and he urged the governor to continue those reforms," Treasury spokesman Rob Nichols said in a statement.

　　Nichols said Snow told Zhou he would soon appoint a "high-level attache" to be stationed in Beijing to help facilitate China's transition to a flexible currency regime.

　　Snow offered Zhou "the US view that the international trading system works best with free trade, free flow of capital and the flexible market-based exchange rates," Nichols said. He also told Zhou he was "encouraged" by reports from a Treasury technical cooperation team recently returned from China.

　　China's central bank earlier last week said it was tightening credit and requiring weak banks to set aside larger reserves in a move seen as trying to cool the Chinese economy.

　　Earlier, Zhou met with International Monetary Fund acting head Anne Krueger, a fund official said.

　　The chinese central banker had been set to meet with Alan Greenspan as well last Friday but the Federal Reserve chairman had to cancel the meeting because of a cold, a member of the team planning logistics for Zhou's Washington visit said.

　　(Reuters)