U.S. says China agrees steps to level playing field

WASHINGTON (Reuters) - China has agreed to take a number of steps to level the playing field for American firms, especially in the area of government procurement, a senior U.S. Treasury official said on Tuesday.

Chinese officials at this week's U.S.-China Strategic and Economic Dialogue said a promise made by China's President Hu Jintao to not use government procurement policies to encourage domestic innovation would apply at the local government level as well as the central government, the official said.

The Chinese delegation also agreed to an inspection process to ensure government agencies are only using legal software to address concerns that U.S. software manufacturers have about high rate of piracy, the official said.

The two sides also talked in depth about China's exchange rate regime. Chinese officials indicated their intention to continue moving toward a more market-oriented exchange rate, the official added.

China now sees further currency appreciation as part of its strategy to fight domestic inflation, the official added, noting that the tenor of talks between the United States and China on the issue has changed for the better.

(Reporting by Doug Palmer; Editing by Gary Crosse)