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"As long as human rights are violated, there can be no foundation for peace. How can peace grow where speaking the truth is itself a crime?"

Obama in China faces tensions on trade and Tibet

November 18, 2009

By Caren Bohan and Patricia Zengerle
November 15, 2009

SHANGHAI, Nov 16 (Reuters) -- U.S. President
Barack Obama faces tensions with China over trade
and Tibet on his first visit to the emerging
superpower for a summit that will grapple with
economic imbalances and the future of the yuan currency.

Obama arrived in Shanghai, China’s commercial
hub, late on Sunday and is due to meet city
officials and hold a town hall-style meeting with
young people before heading to Beijing later on Monday.

Chinese state-run Internet sites have asked the
public for questions to quiz Obama at the youth
meeting, and many urged him to explain if he
plans to meet the Dalai Lama, the exiled Tibetan
leader whom Beijing brands a separatist.

These events will be a warm-up for Obama’s summit
with President Hu Jintao in the capital on
Tuesday that will cover trouble-spots such as
North Korea and Iran, and efforts to forge a new climate pact.

Obama has said he will also raise the sensitive
subjects of human rights, and sometimes tense
trade ties and China’s yuan currency, seen by
U.S. industry as significantly undervalued and
stoking unsustainable global economic imbalances.

"The president will be talking about balanced,
strong sustainable growth and the policies that
go into making that happen," a U.S. official,
speaking on condition of anonymity, told Reuters.

Obama’s message won backing from the managing
director of the International Monetary Fund,
Dominique Strauss-Kahn, who said on Monday that a
stronger yuan was needed to help Beijing
encourage more domestic consumption and ease global imbalances.

But at a gathering of Asia-Pacific leaders in
Singapore over the weekend, Hu pointedly ignored
international calls for his government to raise
the value of the yuan and make Chinese exports relatively more expensive.

He and other senior Chinese officials have
instead accused other countries -- implicitly
including the United States -- of embracing
damaging trade protectionism aimed at Chinese goods.

But having already made their gripes clear before
the summit, Obama and Hu may avoid sharp public
jabs as they focus on building goodwill between
the the world’s biggest and third biggest economies.


China has had a huge trade surplus with the
United States, and is also the largest foreign holder of U.S. government bonds.

The U.S. trade deficit with China widened 9.2
percent in September to $22.1 billion, the
highest since November 2008, according to U.S. data released last week.

The two nations were now like "conjoined twins,"
said a commentary in the overseas edition of the
People’s Daily, the official mouthpiece of China’s ruling Communist Party.

"Even if one wants to sever itself from the
other, that can’t be done without injuring
oneself," said the commentary, which also said
the United States was in no position to criticise China on economic frictions.

"When it comes to the current China-U.S. trade
disputes, the United States has been the instigator of irresponsibility."

The commentary took another swipe: "In an
interview before his visit, Obama said that he
hopes China becomes a ’responsible’ power. In
fact, there would be nothing more fitting than
directing these words at the United States."

U.S. officials have sought to play down tensions
that have simmered over the Obama
administration’s decisions to slap tariffs on
Chinese-made tyres and steel pipes.

In response to the duties on tyres and other
goods, China has launched anti-dumping and
anti-subsidy investigations into imports of U.S.
chicken parts and automotive parts.

The U.S. official said he did not expect rows
over trade issues to cloud talks. He said Obama
and Chinese officials are able to discuss the
trade issues in a "mature and pragmatic way".

Obama’s meetings with China’s leaders were
unlikely to yield big policy shifts on problems
facing the two powers, said Drew Thompson, an
expert on China at the Nixon Center in Washington.

"This isn’t a trip about deliverables," Thompson
told reporters in Beijing. "It’s a trip about
staying the course, keeping the two ships on the
same course and not letting them bump into one another."

Obama has cast his visit as an effort to win
trust from a government and a public often wary
of U.S. intentions towards the rising Asian superpower.

The United States welcomed Beijing’s growing
global role and "does not seek to contain" it,
Obama said in a tone-setting speech on Asian policy in Tokyo on Saturday.

But nearly 80 percent of Chinese respondents who
answered an online survey said the United States
did not want to see their country rise, a Chinese
magazine, Globe, reported last week.

It appeared China would not meet U.S. hopes for
the session to be shown nationwide on Chinese
television. Officials plan to air it only on a
local Shanghai service, the U.S. embassy said.

(Additional reporting by Jason Subler; Writing by
Chris Buckley; Editing by Benjamin Kang Lim, Ken Wills and Dean Yates)
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