(Adds details from Wen speech)
By Andreas Moeser
BERLIN, Jan 29 (Reuters) - China is determined to keep its currency at a sensible and balanced level and is not to blame for sharp fluctuations in exchange rates, Premier Wen Jiabao said during a trip to Berlin on Thursday.
The new U.S. Treasury Secretary Timothy Geithner last week surprised China by branding it a currency manipulator for depressing the value of the yuan to support its exports and the International Monetary Fund has said the yuan is undervalued.
"Given the current economic situation we think the exchange rate ... should be kept at a reasonable and balanced level," Wen told reporters at a joint news conference with German Chancellor Angela Merkel.
"There are strong fluctuations in exchange rates between different currencies in the world... but China is not to blame for this," Wen added.
Wen said China's foreign exchange rate policy stuck "to the principle that it is oriented towards market needs and the exchange rate is flexible or bound to a currency basket."
China's monetary policy was appropriately expansive Wen later told a conference in the German capital.
Wen was in Berlin as part of a European tour to discuss cooperation in solving the international financial crisis.
China, the world's third-largest economy, has slowed much more sharply than expected due to the financial crisis, as wilting U.S. and European demand have hurt its export sector.
Wen said his government would take steps this year to improve its 4 trillion yuan economic stimulus package.
ECONOMIC TIES
Germany and China said in a joint statement issued on Thursday that they wanted to reform the international financial system and ensure concrete results at a meeting of leaders from the Group of 20 nations in April.
Merkel and Wen both spoke out against protectionism and promised to strengthen ties between their two countries, the world's two top exporters of goods.
Merkel said she saw good possibilities for further cooperation on infrastructure projects, such as trains.
During Wen's Berlin visit, China's Shanghai Maglev Transportation Development Co signed a Memorandum of Understanding with Germany's ThyssenKrupp on the Transrapid magnetic high speed rail project.
In a separate deal, Chinese truck maker Beiqi Foton and Germany's Daimler AG on Thursday formally signed a previously agreed truck venture.
Trade between China and Germany grew significantly in 2008, with German exports to China rising by an annual 14.3 percent to 31.3 billion euros through November 2008. Germany imported goods worth 54.3 billion euros from China during the same period, an increase of 5.6 percent, official data show.
Wen and Merkel said they aimed this year to at least maintain their trade volume at last year's level. Germany and China are competing for the position of the world's top goods exporter.
World Trade Organisation (WTO) chief economist Patrick Low said this month Germany would probably keep the crown in 2008 but China could surpass it this year if recent trends continue.
After the first 11 months of 2008 Germany had exported $1.377 trillion of goods, or some $60 billion more than China over the same period, he said.