The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
U.S. complains about yuan, lashes Germany
Washington again stops short of accusing Beijing of manipulating its currency but criticises Berlin for running large trade surpluses
The US government has raised concerns about the value of the yuan but declined again to accuse Beijing of manipulating it.
However, it had sharp criticism for Germany, a traditional ally, saying that country needed to do more to rebalance growth in Europe and the global economy.
Washington said in a report on Wednesday that the yuan remained "significantly undervalued".
Officials said, however, that China's actions did not meet the legal requirements for the country to be designated a currency manipulator. That designation would trigger intensive negotiations and could ultimately lead to trade sanctions.
The United States criticised Germany for maintaining a large trade surplus throughout the euro-zone debt crisis. The report said Germany's surplus was larger than China's last year and that was causing trouble for its neighbours.
It urged Germany to push for more domestic-led growth rather than relying so much on exports. This would have the advantage of providing markets to boost the exports of Germany's neighbours and other countries.
"Germany's anaemic pace of domestic-demand-led growth and dependence on exports have hampered rebalancing," the US said.
The criticism came in a twice-a-year Treasury report on whether any countries are manipulating their currencies to gain trade advantages.
Referring to the yuan, the report said: "The [yuan] is appreciating but not as fast or by as much as needed. Treasury will carefully monitor the pace of [yuan] appreciation and press for further policy changes consistent with market determination of the exchange rate."
The report said the US planned to closely monitor the currency policies of Japan and South Korea.
It cautioned Japan about its policies as its central bank launched a new effort this year to bolster its economy. That effort has weakened the value of the yen and could widen the trade gap with the US.
US manufacturers have long contended that China was manipulating its currency to gain trade advantages. The weakness in the yuan and the yen makes goods from those two countries cheaper for American consumers and US goods more expensive in those markets.
The Treasury said it would discourage Korea's government from intervening in currency markets unless such action was needed to stabilise disorderly markets. Seoul intervened to sell the won this year and last year to keep its value from rising.
The US has now declined to brand China as a manipulator for 10 consecutive reports. It has argued that the US is more likely to make progress on economic issues through negotiation than confrontation.
The US trade deficit with China has for years been the largest with any country.
The last time the US named any country as a currency manipulator was in 1994, when the Clinton administration made that accusation against China.