The White House is pushing Beijing to cut tariffs and reverse a currency policy that many in the US believe hands Chinese manufacturers an unfair advantage.

The State Council also ordered the country’s local governments to “appropriately enlarge” the import of consumer goods. Government departments and local administrations in China must “adjust their focus on encouraging exports and limiting imports and place equal emphasis on both”, the State Council said.

But analysts say the rush to showcase green technology at the Auto China 2012 exhibition, which opened Monday, is unlikely to hide the fact it may still take a long time for the Asian nation to fully embrace an electric future.

The central bank said over the weekend that it would double the amount the exchange rate could rise or fall in a single day to as much as 1 percent.

The move is aimed at introducing more volatility into the exchange rate to discourage speculators or capital inflows that could contribute to inflation.

The wider trading band also invites more market-oriented pricing of the yuan, which has long been accused of being undervalued to make Chinese exports more competitive.

Beijing has increasingly asserted that the yuan has reached market value, citing a large decline in its current account surplus.

China wants to eventually internationalize the yuan and promote it as a reserve currency so that it can reduce its reliance on the dollar for trade.

However, that likely won’t happen until China’s leaders agree to let the free market determine the value of the yuan, also known as the renmenbi.

Under the current system, the central bank determines the exchange rate each business day using a basket of currencies as reference.

Still, economists and foreign officials said China’s move to increase the trading band Monday was encouraging on both financial and political fronts.

International Monetary Fund chief Christine Lagarde called the expanded range an “important step” in rebalancing the Chinese economy toward domestic consumption.

A White House official said China has made progress in reforming its currency but that the U.S. wanted to see still more.

“The wider band lays the groundwork for a more market-driven and volatile exchange rate regime somewhere down the road,” said Mark Williams, chief Asia economist for Capital Economics in London. “Second, it signals that the policymaking process in Beijing continues to function, contrary to some suggestions that infighting ahead of the leadership handover was resulting in policy paralysis.

The yuan appreciated nearly 5 percent against the dollar last year. That pace is expected to slow to around 2 percent this year, analysts say.

The move represents the latest effort by Beijing to solicit investments from outside China. As of Sunday, Taiwanese investors were allowed to establish in China individually owned businesses consisting of no more than 10 employees and an operating area of no greater than 500m2, the English-language People’s Daily reported on Thursday.

Hong Kong, a former British colony that returned to Chinese rule in 1997, is a freewheeling capitalist hub which enjoys a high degree of autonomy and freedom, but Beijing’s Communist Party leaders have resisted public pressure for full democracy.

Li, widely expected to succeed Wen Jiabao as premier in a leadership transition that begins later this year, promised flexible policies to keep growth brisk and prices stable, with a focus on boosting domestic demand and pursuing structural reforms to make growth more stable and balanced.

“China has reached a crucial period in changing its economic model and (change) cannot be delayed. Reforms have entered a tough stage,” Li said, echoing comments made by Wen last week. “We will make policies more targeted, flexible and forward-looking to maintain relatively fast economic growth and keep price levels basically stable,” Li said in a speech at an economic policy conference, attended by top Chinese officials, the head of the IMF and dozens of foreign business leaders.

He said China would “deepen reforms on taxes, the financial sector, prices, income distribution and seek breakthroughs in key areas to let market forces play a bigger role in resource allocation”.

Li’s renewed emphasis on reform-led growth comes after Wen said slower growth and bolder political reform must be embraced to keep the world’s second largest economy from faltering and to spread wealth more evenly, promising to use his last year in power to attack discontent that he warned could end in chaos.

Wen told a news conference at the end of the National People’s Congress (NPC) that growth would be made more resilient to external pressures, domestic property and inflation risks deflated and 10.7 trillion yuan ($1.7 trillion) in debt racked up by local governments dealt with, while also promoting political change. He cut China’s official 2012 growth target to 7.5 percent, down from the 8 percent targeted in each of the last eight years, aiming to create leeway to deliver reform of items including subsidies, without igniting inflation.

China’s annual rate of inflation cooled to 3.2 percent in February, below the government’s 4 percent target for the first time in more than a year. But policymakers remain particularly sensitive to elevated commodity prices, given China’s huge imports of raw materials.

Zhang Ping, head of the country’s top planning agency, the National Development and Reform Commission, told the Sunday conference that economic policies maintaining relatively fast growth were key to the country’s future.

“First of all, we need to maintain steady and relatively fast economic growth — development is the key for resolving all problems in China,” Zhang said.

The government would maintain prudent monetary and pro-active fiscal policies, and stand ready to fine-tune settings — a consistent refrain from China’s leaders since the autumn of 2011.

The show of unity over pro-market reform took on new significance last week when China’s central leadership moved to bolster control over the southwest city-province of Chongqing after ousting its contentious but popular chief, Bo Xilai.

The calls for unity with the ruling Communist Party’s top leaders were emblazoned on the front pages of Chongqing newspapers on Saturday. They made no mention of Bo, removed from power after a scandal when his Vice Mayor Wang Lijun took refuge in February in a U.S. consulate until he was coaxed out. After arriving in Chongqing in 2007, Bo, 62 and a former commerce minister, turned it into a bastion of Communist revolutionary-inspired “red” culture and egalitarian growth, winning national attention with a crackdown on organised crime.

His self-promotion and revival of Mao Zedong-inspired propaganda irked moderate officials. But his populist ways and crime clean-up were welcomed by many residents and others who hoped Bo could try his policies nationwide.

Li said that while the overall trend of China’s economy was stable with sound fundamentals, it faced structural obstacles that must be overcome, adding that Beijing would push forward structural reforms while encouraging technological innovations to generate new sources of economic growth.

International Monetary Fund managing director, Christine Lagarde, dangled an additional reform carrot at the same economic forum on Sunday, saying that the yuan could become a global reserve currency with the right mix of market-oriented structural change.

“What is needed is a roadmap with a stronger and more flexible exchange rate, more effective liquidity and monetary management, with higher quality supervision and regulation, with a more well-developed financial market, with flexible deposit and lending rates, and finally with the opening up of the capital account,” Lagarde said.

“If all that happens, there is no reason why the renminbi (yuan) will not reach the status of a reserve currency occupying a position on par with China’s economic status.”

China, the world’s biggest exporting nation and the second-largest importer, has long wanted to break the dollar’s dominance as the principal global unit of cross-border trade, in part to battle internal inflation risks and also to enhance Beijing’s influence on the international financial system.

China’s has a closed capital account system and its currency is tightly controlled.

Although Beijing has increased the use of the yuan to settle cross border trade, undertaking a series of reforms in recent years to that end, yuan settlement was only about $300 billion in 2011, which Chinese exports were worth about $1.9 trillion.

Li said he expected China’s total trade to maintain double-digit growth this year. The government has an official target of 10 percent growth in both imports and exports for 2012.

Exports are a key source of demand and jobs for China’s vast factory sector and have been a principal driver of wealth creation for much of the last decade in the wake of the country’s accession to the World Trade Organisation.

China’s trade balance plunged $31.5 billion into the red in February as imports swamped exports to leave the largest deficit in at least a decade and fuel doubts about the extent to which frail foreign demand drove the drop.

Li said that there were some encouraging signs emerging about the pace of global economic recovery, and forecast that China’s total trade would top $10 trillion in the five years 2011-2015, but added that the outlook was not certain, with efforts to resolve Europe’s debt crisis still evolving.

Economists expect China’s annual economic growth to slow to close to 8 percent in the first three months of 2012, down from 8.9 percent in the last quarter of 2011. That would be the fifth successive quarter of slower growth and leave China on track to end the year with its weakest expansion in a decade.

A raft of economic indicators in the last two weeks have signalled that China’s economy is on a gentle glide lower and on course to avoid a so-called hard landing.

“Is renminbi appreciation over?” People’s Bank of China Gov. Zhou Xiaochuan asked rhetorically at an annual news briefing in Beijing, using the formal name for the yuan. Although he didn’t directly answer his question, his explanation indicated that he thought the answer was probably no.

“I think [the value of the yuan] mainly depends on supply and demand,” Mr. Zhou said. But getting to that point “is not that simple.”

“The closer the renminbi moves to an equilibrium level, the bigger role the market plays,” he added. At that point, the central bank could reduce intervention “in an orderly manner.” The equilibrium is the point at which supply and demand for a currency match, suggesting that the currency is fairly valued.

Since June 2010, when the PBOC allowed the yuan to float somewhat, the PBOC has intervened to guide the currency higher. But the future direction of the yuan has become increasingly murky as China’s trade surplus has eroded in recent months.

In February, China ran a $31.5 billion trade deficit, the largest monthly deficit at least since 2000. While the weeklong Lunar New Year holiday in January disrupted China’s usual export-and-import flow for the first two months of the year, the trade deficit for January and February totaled $4.25 billion, compared with a deficit of $890 million in the first two months of last year.

People’s Daily leads with President Hu Jintao’s meeting with delegates to the Chinese People’s Political Consultative Conference (CPPCC), which kicked off its annual session on Saturday.

Mr Hu vowed to enhance social security and improve people’s well-being, says the China Daily.

People’s Daily also carries an editorial which says it believes delegates to the National People’s Congress (NPC) will be able to “convey people’s wishes faithfully”.

“Standing behind some 3,000 delegates are the 1.3bn population of China,” the editorial says.

Now Henry Tang, thought to be Beijing’s preferred choice as the next chief executive of the Hong Kong Special Administrative Region, is in hot water over illegal construction at his wife’s luxury villa. Hong Kong, technically a part of China, operates most of its own affairs under the rubric of “one country/two systems.”

“Beijing has to be careful,” Jean-Pierre Cabestan, a professor at Hong Kong Baptist University, told my colleague Kevin Drew. “Local society is more frustrated than ever, and an increasing number of people feel sidelined by the mainland nouveaux riches coming here.”

Kevin reported on the growing controversy around Mr. Tang, the 59-year-old scion of a wealthy family from Shanghai:

“The scandal has provided more than just tabloid headlines. Political observers say the concerns dogging Mr. Tang reveal a growing public frustration that the local political and economic system is ruled by a small elite out of touch with the rest of the population. Mr. Tang’s candidacy, analysts add, also suggests a need to rethink the vetting process for candidates, and has fueled a growing local anxiety over Hong Kong’s relationship with mainland China.”

“Special Representative for North Korea policy Glyn Davies will lead an inter-agency team to Beijing on Feb 23 to meet with a DPRK delegation led by First Vice Minister Kim Kye-gwan,” Nuland said, referring to the North by its formal name of the Democratic People’s Republic of Korea. “This is a continuation of the meetings that we have been having with North Korea … to see if it is prepared to fulfill its commitments under the 2005 Joint Statement of the Six-Party Talks,” she added.