"The yuan exchange rate is not the cause of the US trade deficit," foreign ministry spokeswoman Jiang Yu said in response to a question on how China viewed Obama's remarks.

"I hope that the US can expand its exports to China and reduce barriers for trade and investment. We believe this will help the US reduce its trade deficit."

In a letter to the US National Council of Textile Organizations published on Wednesday, Obama called for China to change its foreign exchange policies to rely less on exports and more on domestic demand for growth.

"The massive current account surpluses accumulated by China are directly related to its manipulation of its currency's value," Obama said in the letter, published on the council's website.

"The result is a large imbalance that is not good for the United States, not good for the global economy and likely to create problems in China itself.

"China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth."

Jiang however refused to comment specifically on Obama, giving no indication as to whom the Chinese government favoured out of the Democratic candidate or Republican nominee John McCain.

"The US presidential elections are the internal affairs of the United States," she said.

"We believe that whoever wins this election will attach importance to US relations with China."

Both Obama and McCain have focused mainly on the global financial crisis and said little about their policies towards China.

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