Some U.S. politicians have argued China has gained an unfair competitive edge in global markets by keeping the yuan artificially low to boost exports. American manufacturers say imports from China cost the United States jobs.

"Available evidence suggests the RMB (yuan) remains significantly undervalued," the U.S. Treasury said in a statement, saying it would "press for policy changes that yield greater exchange rate flexibility."

However, the Treasury again shied away from taking the more serious step of labeling China a currency manipulator, saying the statutes covering such a designation "have not been met with respect to China."

The yuan has appreciated 8 percent against the dollar since June 2010 when China took its currency off a firm peg with the dollar, Treasury said.

"We believe further appreciation of the RMB against the dollar and other major currencies is warranted," it said following the release of its semi-annual report to Congress on international economic and exchange rate policies.