China has promised a more flexible currency policy to help close the trade gap with the United States, US Treasury Secretary Henry Paulson has said.
China and the US talk, but don't see eye to eye yet
US manufacturers say China's currency is kept deliberately weak to boost its exporters, making it hard for US firms to gain market share in the country.
The US-China trade deficit is set to reach a record $229bn (£116bn) in 2006.
Both governments launched a "strategic economic dialogue" with talks in Beijing to improve relations.
Mr Paulson said China and the US had agreed to "take measures to address global imbalances through greater national savings in the United States, and to increase consumption and exchange rate flexibility in China".
However, Mr Paulson and his high-powered delegation failed to agree a firm timetable for a further strengthening of China's yuan.
His opposite number, Vice Premier Wu Yi, described the talks as useful "to build mutual understanding," but did not comment on the currency issue herself.
"We have reached some consensus, although we remained different on some issues," Ms Wu said at the end of the two-day meeting.
China used to have a fixed exchange rate to the dollar, but in July last year allowed the yuan to trade in a very narrow range against the US currency.
Over the past year-and-a-half the yuan has gained just 3.74% against the US dollar, reaching a new high of 7.8185 on Friday.
Strategic economic dialogue
Strengthening the yuan would improve the lives of ordinary Chinese and help ease global trade imbalances, said Ben Bernanke, the chairman of the US central bank.
Speaking at a Chinese government think tank he added that a stronger Chinese currency would also "reduce the incentive for Chinese firms to focus on exporting".
The lack of a firm deal on the yuan, however, is likely to stoke the worries of US politicians and manufacturers.
"We cannot continue to wait for this long-term goal [of floating the yuan] and suffer the consequences of insignificant short-term action," said Democratic Senator Christopher Dodd and his Republican counterpart Richard Shelby in a joint statement.
The new biannual economic dialogue was agreed in September during a meeting of US President George W Bush and Chinese President Hu Jintao.
The US treasury secretary was accompanied not only by Mr Bernanke but also by six members of President Bush's cabinet.
On the sidelines of the talks, both countries struck a deal that will allow the two top stock markets in the United States, Nasdaq and the New York Stock Exchange, to open offices in China.