A more flexible Chinese currency is key to global economic growth, US Treasury Secretary John Snow has argued, in a new call for Chinese currency reform.
John Snow has led US calls for China to revalue its dollar rate
Mr Snow said the yuan's fixed rate of exchange against the dollar risked unbalancing world trade.
Many US politicians believe the yuan's true value is artificially depressed, helping it to export goods cheaply.
The US government said on Wednesday that it would impose quotas on further Chinese textile imports.
It introduced emergency restrictions on certain imports earlier this month after coming under pressure from US producers worried about being priced out of the market by a surge of Chinese imports.
The Committee for the Implementation of Textile Agreements - which is led by the Commerce Department - now plans to expand the list of goods to include more categories of shirts and trousers.
The US Senate is due to vote on a bill later this summer which would impose a 27.5% tariff on all Chinese imports to the United States unless China removes the currency peg within six months.
In a speech to the American Iron and Steel Institute on Wednesday, Mr Snow said that the fixed yuan-dollar rate - which has been in place since 1994 - made it more difficult for China to control its interest rates.
"China must also play its part in promoting sustained world economic growth and the adjustment to international imbalances," he said.
"This is where China's exchange rate is key."
Earlier this week, the US Treasury said that China was in danger of being censured for manipulating its currency and called on it to move "without delay" to loosen restrictions on the yuan.
In response, the Chinese government has accused the United States of double standards for imposing import tariffs while calling on China to abide by free trade regulations.
The US has placed emergency quotas on certain Chinese textiles
Wei Benhua, deputy administrator of China's State Administration of Foreign Exchange, told a conference in Beijing that US criticism of China's exchange rate policy was "unfair".
"We cannot accept that," he said.
"We do have a surplus with the United States. However we also have (trade deficits) with many of the European countries and also with the Southeast Asian region.
"So how do you manipulate your currency just to get a surplus with the US?"
Economics experts said the Bush administration was playing to two different audiences in its criticism of China's yuan policy.
"In recognising the risks but refusing to call China's actions for what they are, the administration is trying to make everyone happy," Peter Morici, a professor at University of Maryland, told Reuters.
"It is trying to appease critics in Congress without provoking the Chinese."