Ahead of Obama meeting, Chinese premier plays down differences with US

By Foster Klug, AP
Thursday, September 23, 2010

China seeks to play down differences with US

NEW YORK — Chinese Premier Wen Jiabao expressed optimism Wednesday that the United States and China would resolve major trade frictions, even as he rejected U.S. claims that Beijing’s currency policies cost American jobs.

Despite sometimes tough words, Wen used much of a speech on the sidelines of a United Nations global summit to try to ease U.S. anger against China ahead of a Thursday meeting with President Barack Obama.

Relations between the powers have suffered recently, but Wen sought to play down economic, military and diplomatic tensions. The United States and China, Wen told business leaders gathered at the Waldorf-Astoria hotel, are “not rivals in competition but partners in cooperation.”

Wen, however, pushed back against U.S. claims that Beijing’s tightly regulated, undervalued currency - the yuan - gives China’s exporters an artificial advantage over U.S. manufacturers. Ahead of U.S. congressional elections in November and at a time of high American unemployment, China’s economic and trade policies are a major friction in ties with Washington.

Wen warned that China’s currency must not be turned into a political issue between the countries. He saw no link between the yuan’s value and China’s trade advantage over the United States. The politically sensitive U.S. trade deficit with China jumped to $26.2 billion in June, the largest one-month gap since October 2008.

“We do not seek a trade surplus,” Wen said through an interpreter. Many Chinese companies, he said, would go bankrupt and workers would suffer if the Chinese currency rose drastically.

The Obama administration must balance pressure on Beijing’s economic policies with its desire for Chinese help in settling nuclear standoffs with North Korea and Iran and on other global initiatives. China is a veto-wielding member of the U.N. Security Council and recently passed Japan as the world’s second-biggest economy.

Speaking ahead of Wen, U.S. Commerce Secretary Gary Locke pushed for a change in China’s currency policy and called for a fair business environment that allows Americans to compete with Chinese companies and invest without hindrance.

Locke said a “worldwide rebalancing, in which America buys a little less and sells a little more to China and the rest of the world, will create a more prosperous future for everyone.” He said “strong and lasting global growth cannot be built on the backs of debt-ridden U.S. consumers.”

Some U.S. lawmakers are pushing for a bill that would punish China if it doesn’t do more to let the yuan rise.

Obama, speaking Monday in Washington, said China’s currency “is valued lower than market conditions would say it should be.”

“So it gives them an advantage in trade,” Obama said. “We are going to continue to insist that on this issue, and on all trade issues between us and China, that it’s a two-way street.”

Currency is not the only point of tension between the countries.

Thursday’s Obama-Wen meeting also comes as China lashes out at the United States for what Beijing says is interference in its territorial disputes in the South China Sea. China is also angry over U.S. arms sales to Beijing rival Taiwan and Obama’s meeting earlier this year with the Dalai Lama, the exiled Tibetan Buddhist leader China calls a separatist.

Still, Wen was consistently optimistic in his speech, saying the countries’ common interests far outweigh differences.

“We don’t have any reason to let our relationship back-peddle,” Wen said, and “tens of thousands of reasons” to move forward in strengthening ties.

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