The following are highlights from U.S. Treasury Secretary Timothy Geithner's testimony on China's currency regime, which was released and prepared for delivery to the Senate Banking Committee.

On China's Echange Rate Progress
"We are concerned, as are many of China's trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited. We will take China's actions into account as we prepare the next Foreign Exchange Report, and we are examining the important question of what mix of tools, those available to the United States as well as multilateral approaches, might help encourage the Chinese authorities to move more quickly."

On Low Yuan Rates Effect On US. Production
"The undervalued renminbi helps China's export sector and means imports are more expensive in China than they otherwise would be. It undercuts the purchasing power of Chinese households. It encourages outsourcing of production and jobs from the United States. And it makes it more difficult for goods and services produced by American workers to compete with Chinese-made goods and services in China, the United States, and third countries. China needs to allow significant, sustained appreciation over time to correct this undervaluation and allow the exchange rate to fully reflect market forces."

On Chinese Forex Intervention:
"As the exchange rate gets closer to a level that reflects underlying economic fundamentals, the level of intervention should decline. Continued heavy intervention, in contrast, would support the judgment that the currency remains undervalued."

On Global Rebalancing Of Demand
"Going forward, sources of global demand growth have to adjust to the new economic realities. China and other surplus countries like Germany and Japan will have to increase domestic demand as the United States and other deficit countries save more and consume less. By continuing to maintain a rigid exchange rate, China is impeding the adjustments needed to secure the strong, sustainable global growth we all need."

On US Policy Options
"We will continue to encourage China to rely to a much greater extent on domestic demand for growth - particularly by giving households the income and the confidence to spend more and enjoy higher living standards. We are urging China through all channels to allow significant, sustained appreciation of the renminbi over time to accurately reflect market forces and correct the distorting undervaluation. We are urging China to end discriminatory trade and investment measures, protect intellectual property, and adhere to international best practices in promoting innovation. We are working in multilateral channels, including the G-20, APEC, and the IMF to press China to achieve balanced, sustainable growth, particularly by allowing prompt, meaningful, and continuing appreciation of the renminbi.

A more flexible renminbi is in the best interests of the entire global community. At the IMF, China allowed publication of the annual Article IV report for the first time since 2006, a step we strongly encouraged. In the G-20, we expect China's commitment to rebalancing to be a key part of the agenda at the Leaders Summit in Seoul later this year."

On Trade Remedies
"We are aggressively using the full set of trade remedies available to us under U.S. law to address unfair trade practices and safeguard the interests of U.S. workers. The Commerce Department has moved actively, consistent with WTO rules, to defend U.S. companies and workers from unfairly traded goods from China."

On Recent Steps By China
"We welcome the recent assurances by the Chinese government, including Premier Wen's statements this week, to afford national treatment to U.S. companies operating in China.

But we want to see that level playing field extended to U.S. exporters selling to China. This is the basic premise of the multilateral trading syst