In response to the January 22 comments by US Treasury Secretary-designate Timothy Geithner - that China manipulated the value of its yuan currency to promote exports - China's commerce ministry official said the "wrong accusation" could intensify protectionism within the US.

In July 2008, China restricted the appreciation of the yuan vis-a-vis the dollar following a 21 percent increase in yuan after the end of a fixed exchange rate three years earlier.

Geithner had said: "Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency."

Geithner's allegedly "misleading" remark over the yuan's value threatens to strain relations between the two biggest economies of the world, thereby weakening cooperation required for combating the grim economic scenario.

The commerce ministry's comments about Geithner's allegations were reverberated in an article published by the official Xinhua News Agency, wherein Su Ning - Vice Governor of People's Bank of China - called the accusations "untrue and misleading."

Geithner's statement is not the first instance of currency manipulation allegations against China - earlier too China's commerce ministry countered comments on its currency from Obama. His October letter, which a US textile industry group had released, related China's trade surplus to "manipulation" of the yuan's value.

Frank Gong, China strategist at JPMorgan Chase & Co, opines: "China should be expecting a very tough relationship with the new administration. China will be a natural scapegoat for the problems in the U. S!"