WASHINGTON (CNNMoney.com) -- In what may be the bluntest assessment by a high-ranking White House official of China's exchange rate policy, Treasury Secretary Tim Geithner said Wednesday that China's undervalued currency makes the nation dependent on U.S. monetary policy.
"I think China will be better; they're stronger as an independent country if they're not running an exchange rate policy that, essentially, has the Federal Reserve of the United States setting monetary policy in China," Geithner told CNN's John King in an interview taped for "John King, USA." The interview will air at 7 p.m. ET.
Geithner added that he believes that over time the Chinese will appreciate their currency.
"I think many of them understand and they'll come to decide that it's in their interest, as they move," Geithner said. "I think it's quite likely they move over time."
China has been under fire for keeping the yuan pegged to the dollar for almost three years. The currency is now about 20% to 40% below the level it would be if it traded as freely as most other currencies, according to economists' estimates.
The low exchange rate keeps Chinese exports cheap and has been blamed for the widening trade gap between China and the United States, as well as the loss of manufacturing jobs in the United States.
Earlier Wednesday, lawmakers on a House Ways and Means Committee targeted the undervalued yuan during a hearing on the issue. Rep. Sander Levin, D-Mich., called China's currency policy "bad for the rest of the world."
On April 15, the Treasury Department will release a list of nations they consider "currency manipulators," and many are wondering in China will be on the list, which could further strain relations.
Geithner did not address the list, saying the United States can't "force them to make that change," but that it's important for China to allow their currency to appreciate.
In a wide ranging interview, Geithner stressed the importance of regulatory overhaul moving in Congress and defended Treasury programs aimed at helping homeowners, which was the subject of a critical inspector general report released Tuesday.
"Because of what the president did...house prices essentially stopped falling, on average, across the country," Geithner said. "There's much more stability now, and that's hugely important to the basic economic security of all Americans."
Geithner deflected a question about his reaction to calls for his resignation, adding that was a question "for the president."
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