China, US Meet Amid Tensions           09/06 09:57

   Senior U.S. and Chinese officials met Monday to steady relations upset by 
disputes over currency, trade and military affairs despite calls for a tougher 
line on Chinese economic policies that some say are contributing to American 
unemployment.

   BEIJING (AP) -- Senior U.S. and Chinese officials met Monday to steady 
relations upset by disputes over currency, trade and military affairs despite 
calls for a tougher line on Chinese economic policies that some say are 
contributing to American unemployment.

   With congressional elections in two months, President Barack Obama is under 
pressure to kick-start the economy and many lawmakers say he should start by 
addressing China's lopsided trade surplus and currency policies.

   Meanwhile, China's nationalistic state media have criticized U.S.-South 
Korea military exercises in the Yellow Sea and U.S. government statements on 
South China Sea territorial disputes, saying they represent threats to China's 
security.

   Chinese officials tried to set a positive tone, emphasizing the need for 
cooperative relations, at the start of their meetings with National Economic 
Council Director Lawrence Summers and Deputy National Security Adviser Thomas 
Donilon.

   "Continuing to develop a positive and comprehensive China-U.S. relationship 
contributes to our two countries' major interests in peace, security and 
development," Foreign Minister Yang Jiechi said.

   Summers later told Vice Premier Wang Qishan that Obama "has emphasized for 
us the importance he attaches to a very strong relationship between the United 
Sates and China."

   Among the issues on the agenda, Summers said, is setting up a visit to 
Washington by Chinese President Hu Jintao.

   The brighter talk is meant to signal a willingness to cooperate after 
several months of public discord, analysts said. Shi Yinhong, an expert on the 
U.S. at Renmin University in Beijing, said relations are troubled but the worst 
is over and both sides are headed toward reconciliation.

   "The key point of the talks is not to make significant agreements, but to 
improve understanding of each other's stance. If tensions can be reduced to 
some degree and confidence increased, that is an achievement," he said.

   Tensions between the world's superpower and a fast-rising China that is now 
the No. 2 economy were kept largely restrained last year as their governments 
worked to reinvigorate the world economy and address other global issues. But 
their failure to strike a deal over climate change at a summit in Copenhagen 
followed by U.S. arms sales to Chinese rival Taiwan and an Obama meeting with 
Chinese nemesis the Dalai Lama soured relations.

   The downward spiral continued during the summer. After much U.S. pressure, 
China announced in June a change to its currency policy, untying the yuan from 
its peg to the U.S. dollar that critics said kept the yuan undervalued and 
hence made Chinese exports inexpensive. But, despite promises of a more 
flexible exchange rate, the yuan has risen a mere 0.6 percent, disappointing 
Washington and renewing attention on China's trade surplus with the U.S., which 
widened in July to an 18-month high of $28.7 billion.

   Summers, a top economic official, was expected to prod China to move faster. 
In recent days, Senator Charles Schumer and other congressional critics have 
said they would renew a push for legislation that would punish China for its 
currency policy by adding punitive duties to imports of Chinese goods.


(KA)