The US ambassador to China yesterday called on Beijing to end its “distorting” currency practices and stop discrimination against US firms, amid growing trade frictions between the two countries.

In a strongly-worded speech in Shanghai, Gary Locke called for fairness in the US-China economic relationship, reiterating criticism of Beijing’s exchange rate policy, which Washington says makes the yuan currency artificially cheap.

“Fairness means ending discrimination against US companies, ending unfair trade preferences for domestic firms, ending what we see as unfair, distorting currency practices,” Mr Locke told US and Chinese business and government leaders.

Speaking at an annual event organised by the National Committee on United States-China Relations – a non-profit group – he also called for improved protection of intellectual property rights and a more open investment climate.

The value of the yuan has been a constant thorn in the side of China-US relations, with Washington blaming Beijing’s currency controls for creating huge international trade imbalances.

Beijing has repeatedly vowed to loosen its grip on the yuan but has rejected calls for a faster appreciation for fear of hurting its vast manufacturing sector, a key driver of the world’s second-largest economy.

Chinese Premier Wen Jiabao last week vowed to improve the flexibility of the yuan, which he said had appreciated about 30 per cent since 2005 when Beijing began reforms.

Foreign firms have also repeatedly complained of discrimination when competing with domestic companies in China, particularly in the lucrative government procurement sector.

But Beijing has eased some rules that blocked foreign firms from the procurement market, which is said to be worth $1 trillion a year.

In his speech, Mr Locke also called on China to protect human rights.

“China will not achieve its full potential if it does not ensure protection of its citizens’ rights,” he said.