China would allow for gradual appreciation of the renminbi, the currency it has pegged to the dollar since July 2008, a government economist in Beijing said.

The Financial Times reported on Tuesday that Ba Shusong, deputy director-general of the Financial Research Institute at the Development Research Center, said the currency was pegged to the dollar as a temporary measure in response to the financial crisis.

It was further reported that China has been under increasing pressure to allow its currency to appreciate to a more realistic level. Economists have said the renminbi, or yuan, is between 10 percent and 50 percent undervalued, which gives Chinese exporters a competitive advantage in the global marketplace.

It would postpone a report that could have labeled China a "currency manipulator," which does not come with specific sanctions, but would have fueled a debate in Congress over a tangible response to the currency problem, the U. S. Treasury has said.

It was "China's choice" to allow its currency to appreciate or not, but that he believed China would understand it would be better off with a currency that could rise and fall based on market influences, U. S. Treasury Secretary Timothy Geithner said. (With Inputs from Agencies)