The US treasury secretary, Timothy Geithner, said he believes China is now "committed" to allowing its currency to rise in value, as he attended hastily arranged talks with officials in the port city of Qingdao today.
The unscheduled meeting with Chinese vice-premier Wang Qishan to discuss the rising economic tensions between the two countries followed a G20 finance ministers' meeting in South Korea where officials pledged to avoid currency manipulation, although they stopped short of setting targets for trade imbalances.
The meeting, announced yesterday, comes against the backdrop of the Obama administration struggling to contain the domestic political fallout of its battered economy. The US deficit, much of it incurred with China, is seen as one important factor behind unemployment rates sticking at an historic high of 9.6%.
No details on the meeting were given, beyond the bland statement that the two finance leaders "exchanged views on US - China economic relations".
But the invitation from Wang for Geithner to visit China signals a degree of willingness on Beijing's behalf at least to talk about the intensifying US complaint that it is artificially holding down its currency. The World Bank has warned that unless leading nations find a way of reaching agreement, there is a risk of a full-scale currency war.
The yuan is widely seen as being at least 20% undervalued, which drives up Chinese exports but has also amassed a US trade deficit with China of $227bn (£144bn) last year.
Geithner said there were promising indications that Beijing was prepared to allow the yuan to rise beyond its recent gradual appreciation.
"They're an independent country, a large economy, they need the flexibility to run their policies in a way that makes sense for China," he said. "That requires that their exchange rate move up over time as they're now doing, and we want to see that continue. They've got a way to go, but I think they are committed to do that. I think you're going to see them continue to move."
Geithner has been steadily raising the pressure on China over the past few days in an attempt to get it to show more flexibility in its monetary policy. He has been rolling out his proposal that surpluses and deficits on countries' current accounts should be capped at roughly 4% of GDP.
Yesterday, he presented a letter to the G20 meeting of finance leaders from the industrial and developing nations in Gyeongju, South Korea, in which he laid out his vision of how the widening global economic imbalance could be reduced.
Countries with persistent deficits – notably the US and other industrialised countries – should move to encourage greater savings and boost exports, while those with sustained surpluses, such as China and Germany, should shift their exchange rates to encourage increased domestic spending.
In a thinly veiled attack on China, the letter called on G20 countries to "refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of an undervalued currency".
The G20 finance ministers agreed a joint position in which they would "pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels". The mere fact that such a statement could be made, and that China was even prepared to discuss currency imbalances within the G20 framework, was being seen as a sign of movement on Beijing's part.
The ragged state of the US economy looks certain to deliver to the Obama administration a drubbing in the polls in the mid-term elections coming in just over a week's time.
The rightwing Tea Party movement, which is spearheading the attack on Democrats across the country, has focused on China in its campaigning, accusing Geithner of having surrendered to a Chinese economic takeover.
The damaging impact of the trade deficit with China is filtering through to US politics at all levels. In Congress, the House of Representatives has already passed a bill that would give the Obama administration the power to penalise countries deemed to be manipulating their currency in order to gain an advantage in world trade.
The Senate is likely to debate a similar measure after the 2 November elections are over.