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

September 26, 2010

FOSTER KLUG (Associated Press Writer)
The Associated Press (AP)
September 23, 2010

NEW YORK (AP) -- 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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