Beijing: US President Barack Obama on Tuesday nudged Chinese President Hu Jintao to allow the yuan currency to appreciate at a summit where they agreed to work to ease trade and economic frictions between the two giants.
Hu did not mention the yuan, China’s currency policy or the dollar during remarks following a meeting with Obama in Beijing’s Great Hall of the People.
However, Obama referred fleetingly to an issue which has provoked testy exchanges in recent days between US and Chinese officials, with Washington arguing that an undervalued yuan is stoking global economic imbalances. The yuan has been effectively pegged against the dollar since the middle of last year.
“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 Chinese and U.S. flags in the background.
“I emphasised in our discussion, as have others in the region, that doing so based on economic fundamentals would make an essential contribution to the global rebalancing effort.”
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 recovery. At the same time, U.S. pressure on China to act makes it hard for Beijing to move because it could be seen as bowing to Washington’s demands.
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, saying the talks went “very well”, said Beijing and Washington would continue to have “consultations on an equal footing to properly address their economic and trade frictions”.
“I stressed to President Obama that under the current circumstances our two countries need to oppose and reject protectionism in all its manifestations in an even stronger stance,” Hu said, a veiled reference to Chinese frustration at recent US trade measures against Chinese goods.
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.
The two leaders also discussed diplomatic headaches such as Iran and North Korea.
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 huge surplus in China’s favour. Chinese exports to the United States were $337.8 billion in 2008 compared to US exports to China of $69.7 billion.