Federal Reserve Chairman Ben Bernanke ratcheted up pressure on China to revalue its currency while an International Monetary Fund study suggested that such a policy move wouldn't harm Beijing's growth if handled properly.

Mr. Bernanke, in his strongest comments to date on the yuan, said Beijing's policy of tying its currency to the dollar at an undervalued rate was a major cause of 'harmful global imbalances' -- meaning that the policy would rely too much on China continuing to import heavily to economically battered U.S. consumers.

Nevertheless, Mr. Bernanke tempered his remarks by saying that revaluing the yuan is in Beijing's self-interest. He also declined to endorse a bill by New York Democratic Sen. Charles Schumer that would make it easier for U.S. firms to benefit from duties on Chinese imports unless Beijing revalues its currency.

The Bernanke remarks come at a complicated moment in U.S.-China relations. The U.S. Treasury recently postponed a decision to name China a 'currency manipulator,' which was due by the end of the month, to give Beijing some political breathing space to revalue its currency without appearing to be buckling to U.S. pressure.

The Group of 20 industrial and developing nations also are gearing up an exercise in global economic policy making that is aimed, in part, at giving China room to change its foreign-exchange policy.

China is widely expected to let its currency appreciate somewhat by the next G-20 summit in June in Canada.

Domestic pressure makes it difficult for U.S. and European politicians to ease up much on Beijing. Indeed, the Chinese have balked at fully participating in the G-20 effort, says Eswar Prasad, a former IMF senior official for China, because they view the effort as yet another lightly veiled attempt to pressure Beijing on the yuan.

On Wednesday, the IMF said in its semiannual World Economic Outlook that China and other countries that run large current-account surpluses could slash those surpluses without harming growth if they adopted a package of other policies, including revaluing their currencies, shifting policies toward domestic consumption and pursuing more sophisticated markets.

The IMF advice comes as the fund is analyzing policies for the G-20 aimed at revamping global growth patterns. Under the initiative, each country is supposed to submit its proposed policies to the IMF, which acts as a referee to judge whether the plans, in total, would produce sustainable growth. The G-20 countries will then use the analysis to press for changes.

The so-called mutual assessment process got off to a rocky start, according to several government officials, after China supplied data for only one year, rather than the five years of information and projections the IMF sought.

Since a G-20 planning session in Korea in February, said several officials, China has made efforts to meet the IMF's requests for data, although a number of G-20 nations remain skeptical of Beijing's intentions.

Germany, in particular, fears being lumped together with China because both have current-account surpluses. Germany uses the euro, which floats, while the Chinese yuan is tied to the dollar.

'The government does not traditionally make medium-term projections,' sought by the IMF, said China's IMF representative He Jianxiong. 'However it has come up with data just for this exercise.'

The IMF's World Economic Outlook analysis isn't formally tied to the G-20 initiative, but it is bound to be cited as an argument why China can afford to reduce its dependence on exports for growth. The IMF analyzed 28 instances over the past half-century, when countries sharply reduced their reliance on trade surpluses. On average, the surplus narrowed by 5.1 percentage points of gross domestic product, in the cases studied, but the countries' growth rate didn't change appreciably.

That is because any economic decline caused by an appreciation in currency was offset by other policies, including government stimulus aimed at boosting domestic demand. 'There is no evidence that transitioning out of large external surplus was associated with lower growth,' the IMF reported.

Bob Davis