China on Friday slammed US criticism of its human rights and currency policies, alleging a campaign of defamation as relations between the two giant powers took a new lurch for the worse.

China rejected a tough US State Department report on its rights record, and took aim at President Barack Obama's call for a "market-oriented" exchange rate regime -- code for a stronger yuan.

The harsh comments come during a rough patch in Sino-US relations, badly strained over everything from Obama's meeting last month with the Dalai Lama to US arms sales to Taiwan, Internet freedom and trade.

According to the State Department report, China's rights record "remained poor and worsened in some areas," with repression in the restive Tibet and Xinjiang regions, and the detention and harassment of activists.

In retaliation Beijing issued its own scathing report, alleging that US workers' rights had been "seriously violated", lamenting the millions who lack health insurance, and accusing Washington of post-9/11 curbs on freedoms.

"The US government still ignores its own serious human rights problems but revels in accusing other countries. It is really a pity," said the report by China's State Council, or cabinet, according to Xinhua news agency.

The report said the United States had used human rights as a "political instrument to interfere in other countries' internal affairs, defame other nations' image and seek its own strategic interests."

The tit-for-tat reports came ahead of high-level talks expected later this year under the so-called Strategic and Economic Dialogue, which began in Washington last year. No date has been announced for those meetings.

US Deputy Secretary of State James Steinberg -- who visited Beijing last week on a fence-mending mission -- told China's state-run Global Times that the countries did not "see eye to eye on every issue."

But they were working through the difficulties together, he said in an interview published Friday.

"The US remains committed to building the type of strong, mature partnership with China that can endure difficult periods," Steinberg said.

The countries are notably working on the disputed nuclear programmes of Iran and North Korea, and Washington needs China's support for new UN sanctions against Tehran.

But on currency policy as on human rights, they remain far apart.

"We don't agree with politicising the renminbi exchange rate issue," People's Bank of China vice governor Su Ning said, according to Dow Jones Newswires.

"We also don't agree with a country taking its own problems and having another country solve them," Su said on the sidelines of China's annual session of parliament.

Obama on Thursday had called on China to adopt a "market-oriented" exchange rate policy, which he said would make an "essential contribution" to rebalancing the world economy after the global financial crisis.

"Countries with external deficits need to save and export more. Countries with external surpluses need to boost consumption and domestic demand," the president said in a speech to the Export-Import Bank in Washington.

But Su countered: "We believe the yuan exchange rate issue will not help shrink or increase our trade surpluses and deficits."

The United States and the European Union, key trade partners for China, say the communist leadership has intentionally kept the currency low to boost its exports. The yuan has effectively been pegged to the dollar since mid-2008.

Many US lawmakers are pressing the Treasury Department to label China a currency "manipulator" in a forthcoming semi-annual report.

Chinese Premier Wen Jiabao said last week the yuan would be kept "basically stable" in 2010, but experts say there is room for potential movement, especially after China released strong export data for February.

Also on Friday, Beijing warned Google of "consequences" if the US Internet giant stops filtering its search engine results.

Google threatened in January to abandon its Chinese-language search engine and perhaps leave China altogether, over what it said were cyberattacks aimed at the Gmail accounts of Chinese human rights activists and web censorship.