Honolulu: United States (US) President Barack Obama and Chinese President Hu Jintao presented dueling trade agendas as an antidote to weak global growth on Saturday at an Asia-Pacific Economic Cooperation (APEC) summit that underscored growing tensions between the world’s two biggest economies.

Hu and Obama laid out competing visions of world trade in back-to-back speeches in Honolulu, and Obama then warned Hu in private that Americans were growing increasingly frustrated over what they see as unfair Chinese trade and currency practices.

Taking China to task with some of his sharpest language yet, Obama used an address to chief executive officer (CEO) at the APEC summit to threaten punitive economic steps unless it started “playing by the rules", as he sought to reassert US influence in a region vital to America’s interests.

US President Barack Obama and Chinese President Hu Jintao shake hands during the APEC Summit in Honolulu, Hawaii. Photo: Reuters

But when the two leaders appeared together as they started face-to-face talks, both sought to play down differences that have tested US-China ties, stressing instead the need for cooperation to tackle global challenges.

Even as Obama used his meeting with executives to highlight US concerns about a rising China, he asserted US was partly to blame for having lost ground and said his administration was working to change that.

Obama told Hu the American people and US businesses were “growing increasingly impatient and frustrated with the pace of change" in the US-China economic relationship, senior White House aide Michael Froman told reporters.

Even as Obama used his meeting with executives to highlight US concerns about a rising China, he asserted US was partly to blame for having lost ground and said his administration was working to change that.

“We’ve been a little bit lazy, I think, over the last couple of decades," Obama said. “We’ve kind of taken for granted - well, people will want to come here - and we aren’t out there hungry, selling America and trying to attract new business into America," Obama said.

Hosting the APEC summit in his native Hawaii, Obama said earlier the “broad outlines" of a deal had been reached on the Trans-Pacific Partnership, a regional free trade pact being negotiated by US and eight other countries.

It was hailed by US officials as Obama’s signature achievement of the summit and a possible template for an eventual APEC-wide free trade zone. APEC’s 21 members make up the world’s most dynamic region and account for more than half of global economic output.

Obama sees increased trade opportunities as an engine for job creation at home that could help him through a troubled 2012 re-election bid with the US economy still struggling.

But Beijing remains wary of the evolving trade pact that Washington is seeking with some of China’s neighbors. It is widely seen as part of a US drive to provide a counterweight to China around the Pacific Rim.

Shadow of crisis

With Europe’s debt crisis sending shock waves around the globe, this year’s APEC meeting was also emerging as a forum to push the euro zone to sort out its problems and for APEC members to strengthen defenses against the fallout.

Obama said he saw positive signs in Europe’s efforts to tackle the crisis but there was still “work to be done" to reassure jittery markets.

Fostering free trade is one of the few steps leaders can take to spur global growth when fiscal and monetary measures are virtually exhausted in many developed countries. But new trade deals usually take years to yield significant benefits.

While insisting US was “rooting for China to grow," Obama urged Beijing to do more to allow its currency to appreciate, create a level playing field on trade and prevent theft of US intellectual property.

“The bottom line is that US can’t be expected to stand by if there’s not the kind of reciprocity in our trade relations and our economic relationships," Obama said. “Where we see rules being broken, we’ll speak out and in some cases we’ll take action."

Limited leverage

Obama has been under pressure, especially from Republican rivals, for a tougher line on China as he seeks re-election. But US leverage is limited, not least because Beijing is America’s largest foreign creditor.

Speaking before Obama, Hu sought to soothe the concerns of foreign businesses over market access in China. He repeated China’s commitment to reform and opening up its economy but offered little new to address complaints that American business cannot compete fairly.

At the same time, he insisted China be given what it sees as its rightful place in world affairs.

“The new mechanism for global economic governance should reflect the changes in the world economic landscape," Hu told executives. “It should observe the principle of mutual respect and collective decision-making and increase the representation and voice of emerging markets and developing countries."

China has been reluctant to sign trade deals that would subject it to US-led efforts to further open its economy to foreign players because that would put competitive pressure on its state-owned enterprises.

Hu told the business leaders he favors pursuing more open trade through bodies such as the World Trade Organization (WTO), saying “we should uphold the multilateral trading regime and deepen regional integration."

With Europe edging toward a recession, fast-growing Asia - led by China - is vital to sustaining global economic growth.

Meeting Obama, Hu said growing uncertainty over the global recovery and regional security threats require China and US to “increase communication and coordination."

“Although there are areas where we continue to have differences, I am confident that the US-China relationship will continue to grow in a constructive way based on mutual respect and mutual interest," Obama told Hu.

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