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China, US meet amid tensions over trade, military

By ANITA CHANG

Associated Press

POSTED:
LAST UPDATED: 11:55 p.m. HST, Sep 06, 2010



BEIJING — Senior U.S. and Chinese officials met Monday to steady relations upset by disputes over currency, trade and military affairs despite calls for a tougher line on Chinese economic policies that some say are contributing to American unemployment.

With congressional elections in two months, President Barack Obama is under pressure to kick-start the economy and many lawmakers say he should start by addressing China's lopsided trade surplus and currency policies.

Meanwhile, China's nationalistic state media have criticized U.S.-South Korea military exercises in the Yellow Sea and U.S. government statements on South China Sea territorial disputes, saying they represent threats to China's security.

Chinese officials tried to set a positive tone, emphasizing the need for cooperative relations, at the start of their meetings with National Economic Council Director Lawrence Summers and Deputy National Security Adviser Thomas Donilon.

"Continuing to develop a positive and comprehensive China-U.S. relationship contributes to our two countries' major interests in peace, security and development," Foreign Minister Yang Jiechi said.

Summers later told Vice Premier Wang Qishan that Obama "has emphasized for us the importance he attaches to a very strong relationship between the United Sates and China."

Among the issues on the agenda, Summers said, is setting up a visit to Washington by Chinese President Hu Jintao.

The brighter talk is meant to signal a willingness to cooperate after several months of public discord, analysts said. Shi Yinhong, an expert on the U.S. at Renmin University in Beijing, said relations are troubled but the worst is over and both sides are headed toward reconciliation.

"The key point of the talks is not to make significant agreements, but to improve understanding of each other's stance. If tensions can be reduced to some degree and confidence increased, that is an achievement," he said.

Tensions between the world's superpower and a fast-rising China that is now the No. 2 economy were kept largely restrained last year as their governments worked to reinvigorate the world economy and address other global issues. But their failure to strike a deal over climate change at a summit in Copenhagen followed by U.S. arms sales to Chinese rival Taiwan and an Obama meeting with Chinese nemesis the Dalai Lama soured relations.

The downward spiral continued during the summer. After much U.S. pressure, China announced in June a change to its currency policy, untying the yuan from its peg to the U.S. dollar that critics said kept the yuan undervalued and hence made Chinese exports inexpensive. But, despite promises of a more flexible exchange rate, the yuan has risen a mere 0.6 percent, disappointing Washington and renewing attention on China's trade surplus with the U.S., which widened in July to an 18-month high of $28.7 billion.

Summers, a top economic official, was expected to prod China to move faster. In recent days, Senator Charles Schumer and other congressional critics have said they would renew a push for legislation that would punish China for its currency policy by adding punitive duties to imports of Chinese goods.

___

Associated Press researcher Yu Bing contributed to this report.






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