US says China is working towards rebalancing its trade
US Treasury Secretary Timothy Geithner has said that China is taking steps to rebalance its trade policy, though more needs to be done.
The US has been one of the fiercest critics of China's trade policy.
It has accused China of keeping the value of it currency artificially low in order to boost foreign sales.
On Friday, the China Daily newspaper reported that China plans to cut tariffs on imports as it seeks to stoke domestic demand.
China is one of the biggest exporters in the world, but demand has weakened in markets such as the US and Europe.
"China understands they can no longer depend on demand from US consumption being such a substantial contributor to growth," Mr Geithner said during testimony to the US Senate Foreign Relations Committee.
"They have no alternative but to shift their growth strategy to a growth strategy that relies more on domestic demand," he added.
"They are moving in that direction but it can't happen unless they let their exchange rate move too."
His comments come at a time when China is taking measures to boost domestic demand.
On Friday, China Daily quoted Vice-Commerce Minister Zhing Shan as saying that not only would the government cut import tariffs, but it would also ease restrictions on importers.
The vice-commerce minister was quoted as saying that an excessive trade surplus was not the goal of Chinese policy.
He added that one of China's goals was to maintain balanced trade.
In a separate measure, the State Council recommended on Thursday that income tax should to be cut in order to give more disposable income to Chinese consumers and workers.
China's trade surplus was $6.5bn (£4bn) in January.