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China's President Hu Jintao and US President Barack Obama inspect honour guards in Beijing - Source: Reuters -
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US President Barack Obama urged a reluctant China to let its yuan currency rise in value at a summit where strains over trade between the two giants crept into proclamations of goodwill.
Standing beside Obama after their summit, Chinese President Hu Jintao avoided mentioning the yuan or the dollar.
Instead, Hu emphasized during a joint media appearance the need to avoid trade protectionism in a thinly veiled reference to China's irritation over new US tariffs on Chinese-made tyres, steel pipes and other products.
With the US unemployment rate at 10.2%, one of Obama's top priorities during his three-day trip to China is pressing Beijing over the huge trade imbalance between the two countries, a move he believes would pave the way for greater US export opportunities.
Washington argues that an undervalued yuan is putting US manufacturers at a disadvantage and stoking global economic imbalances.
"I was pleased to note the Chinese commitment made in past
statements to move toward a more market-oriented exchange rate over
time," Obama said as Hu stood next to him on a podium with three
Chinese and three U.S. flags in the background.
Obama said movement by China on its exchange rate would "make an
essential contribution to the global rebalancing effort".
But his reference to China's "past statements" on currencies indicated Hu might not have been forthcoming on how Beijing might respond.
Hu said the two leaders talked of the need to keep in close contact on "macroeconomic and financial policies and continue to consult, on an equal footing, to properly resolve and address economic and trade frictions".
"I stressed that under the current circumstances, we need to oppose all kinds of trade protectionism even more strongly," Hu said.
Sun Zhe, director of the Center for US-China Relations at Tsinghua University in Beijing, said Hu's silence on the currency may stem in part from a reluctance by China to be seen making policy concessions under foreign pressure.
"I personally think that there may be some slight, symbolic adjustment on exchange rate policy after Obama leaves, but not during the visit itself," said Sun.
"But don't expect much. China believes that the main problem is not the weakness of the yuan but the weakness of the dollar. The feeling here is, 'Why should we be the scapegoat for your dollar problems?"
The issue of currencies has sparked testy exchanges in recent days between U.S. and Chinese officials.
China's Commerce Ministry on Monday rebuffed calls for the yuan
to appreciate, signalling resistance to change a controversial
foreign exchange policy.
Outside pressure has been building on Beijing to let the yuan rise
after more than a year of it being nearly frozen in place against
the dollar, with the latest appeal voiced by the head of the
International Monetary Fund on Tuesday.
China's central bank last week tweaked its description of how it manages the currency, setting off a firestorm of speculation that it might be willing to give the yuan some room to run, although market expectations of appreciation have remained muted.
Investors betting the yuan will soon rise may be disappointed as Beijing is likely to keep the currency on a tight leash at least until mid-2010 to cement China's economic recovery, analysts say.
Seeking to defuse disputes on North Korea, Iran
In addition to discussing economic issues, the two leaders
discussed North Korea and Iran, and promised to cooperate on
fighting global warming.
The Chinese leader said both sides saw signs of a global economic
recovery but noted there was some way to go.
In a joint statement released after the summit, they said they
were "determined to work together to achieve more sustainable and
balanced global economic growth", echoing the position of the G20
on ironing out dangerous imbalances.
Hu expressed appreciation that Obama, who arrived in China on
Sunday night, had welcomed a "strong, prosperous and successful
China that plays an even greater role on the world stage".
Obama said he told China that all minorities should enjoy human
rights and urged China to resume talks with representatives of the
Dalai Lama, Tibet's exiled spiritual leader.
Obama did not meet the Dalai Lama when he was in Washington in early October. But the Dalai Lama has said they may meet after Obama returns from China, which condemns the Buddhist monk as a separatist for demanding Tibetan self-determination.
Chinese media have avoided fawning over Obama, in contrast to the effusive receptions he has received in Europe. Several websites deleted comments championing Internet freedom that he made at a town hall talk with students in Shanghai on Monday.
Trade ties have surged since China opened up to the world and introduced market reforms in the late 1970s after decades of virtual isolation under Mao Zedong, founder of communist China.
But that has sparked tensions because of a surplus in China's favour. Chinese exports to the United States were $337.8 billion in 2008 compared with US exports to China of $69.7 billion.
