US Treasury Secretary Timothy Geithner has called on China to allow its currency to appreciate and take its true form, integrating the policy to a much wider economic reform that would free up Beijing from too much dependence on exports and encourage domestic demands for its products.

Speaking before the finance ministers of the Group of 20 world economic powers on Saturday, the treasury secretary said that the economic power bloc has already discussed a much flexible exchange rate policy in China.

Mr Geithner noted that the Chinese government has launched "very ambitious reforms designed to help strengthen growth in household income, consumption growth and to strengthen domestic demand."

He added that the US government is hoping that "a necessary part of that reform is to resume reform of their exchange rate mechanism."

The G20 has earlier warned, in its communiqué, that market troubles emanating from the Europe debt crisis would pose major headaches to the global economy though the statement released by the group had left out any specific mention of a currency issue.

Critics have been harping on Beijing's policy to keep the Yuan artificially low in order to make its export products more affordable though recent speculations have been floated that China would finally allow the currency some gradual appreciation.

However, many analysts doubt that it would materialise any sooner in light of the worsening European sovereign debt crisis that should push Beijing to seek further exchange rate stability.

China has been adamant about its currency policy and in a recent dialogue with the United States, President Hu Jintao has declared that Beijing would make adjustments on its exchange rate policy only at its own bidding.

Washington has also aired concerns that that China has been bent in calibrating its trade and investment climate to directly favour domestic companies.

Mr Geithner is leaving note though that the Yuan and China issue are only parts of the wider task to rebalance the global economy, as he stressed that "a shift towards higher saving in the United States would need to be complemented by strong domestic demand growth in Japan and in the European surplus countries."