Hu Jintao did give George Bush a general assurance that he was working to make the Chinese currency more "flexible"; but this fell far short of US demands for a dramatic revaluation of the yuan as a way to make US products more competitive in Chinese and global markets and narrow the trade imbalance.

 

The two leaders also failed to bridge differences over how to deal with the nuclear ambitions of Iran and North Korea. Bush wants China to agree to tougher UN Security Council action, but his arguments did not persuade Hu who counselled flexibility and diplomacy.

 

After receiving Hu at the Oval Office, President Bush, said: "We've got a mutual interest in seeing that the Korean Peninsula is nuclear weapons-free."

The last six-party talks on North Korea - involving North Korea, South Korea, the United States, China, Japan and Russia - had ended without progress in November. China is North Korea's main benefactor and key ally.

Hu said China was seeking reconciliation and a peaceful solution to the issue. "The six-party talks have run into some difficulties at the moment. I hope that the parties will be able to further display flexibility, work together and create necessary conditions for the early resumption of the talks."

Bush said that the United States and China had a common goal of ensuring that Iran did not have a nuclear weapon or the capacity to build one.

Stressing diplomacy

"We are ready to continue to work with the US side and other  parties concerned to peacefully resolve the nuclear issue on the  Korean Peninsula and the Iranian nuclear issue through diplomatic  negotiation"

Hu Jintao, Chinese president

Earlier, at a White House arrival ceremony, Hu said China would work with the United States and others on both Iran and North Korea. He said China wanted to resolve the issues "through diplomatic negotiation, to uphold the international non-proliferation regime and safeguard peace and stability."

"Both China and the United States are countries of significant  influence in the world. We share important common, strategic  interests in a wide range of areas, including economic cooperation and trade, security, public health, energy and environmental protection, and on major international and regional issues," Hu said.

"We are ready to continue to work with the US and other  parties concerned to peacefully resolve the nuclear issue on the  Korean Peninsula and the Iranian nuclear issue through diplomatic  negotiation, to uphold the international non-proliferation regime and  to safeguard global peace and stability."

The Bush administration has declined to rule out military action, but said it prefers diplomacy in both disputes.

The two leaders said their bilateral relationship had matured and they could discuss differences openly.

 

"He tells me what he thinks, and I tell him what I think, and we do so with respect," Bush said.

 

On a long-awaited visit to the White House, Hu received the 21-gun salute and full military honours the Chinese had coveted as a sign of respect.

 

Protests

 

Hu's visit drew hundreds of
protesters near the White House 

But in an embarrassing episode that marred the South Lawn ceremony and created a diplomatic stir, a Chinese woman on a press camera platform heckled Hu just as he began speaking.

 

"President Hu, your days are numbered. President Bush, make him stop persecuting Falun Gong," she yelled, referring to the spiritual meditation movement that is banned in China.

 

She was led away by a Secret Service uniformed guard for questioning, and was later identified as Wang Wenyi, 47, a reporter for The Epoch Times, a New York-based newspaper that supports the Falun Gong.

 

Bush personally apologised to Hu for the incident. "I'm sorry this happened," he told Hu, according to Dennis Wilder, Asia expert on the National Security Council.

 

The Secret Service planned to charge her with disorderly conduct and was weighing more serious federal charges that she intimidated or disrupted a foreign official.

 

US officials were annoyed by the interruption.

 

"The hardliners on Hu's team are going to ask, why it took so long for us to pick her up. It is not a good thing," said a US official involved in Hu's visit.

 

The Chinese leader's visit drew hundreds of protesters near the White House gates, from yellow-clad Falun Gong disciples to Taiwanese nationalists waving green flags and Tibetan youth groups.

 

Talks between Bush and Hu began in the Oval Office, spilled into the Cabinet Room and continued during a formal luncheon when they broke protocol and sat next to each other so they could keep talking.

 

Human rights

 

In a rarit Hu answered reporters'
questions in the Oval Office

Covering human rights concerns, Bush complained about China's recent expulsion of a North Korean woman seeking asylum.

 

Stephen Hadley, US national security adviser, told Reuters that China appeared willing to resolve three of six-long standing human rights cases after Hu returned home.

 

"We think we're going to make progress on three of them," he said, while declining to describe them in detail.

 

In a rarity, Hu answered reporters' questions in the Oval Office and US officials saw progress in the communist leader's comment that "if there is no democracy, there will be no modernisation" of China.

 

Stating that China wanted to boost its domestic demand and did not seek an excessive trade surplus, Hu vowed to do more to stop the illegal piracy of American-made software and DVDs, but said Washington could help reduce the imbalance by allowing more high-tech exports to China.

 

Bush, under pressure to reduce last year's $202 billion trade deficit with China, said he hoped China would do more to revalue its currency, the yuan, which Washington considers seriously undervalued against the dollar.

 

'Tiger not pussycat'

 

"He tells me what he thinks, and I tell him what I think, and we do so with respect"

George Bush, the US president

Hu said China would continue to improve the yuan's exchange rate, although he gave no specifics. But on Wednesday, he ruled out any dramatic revaluation of the currency.

 

Wilder of the National Security Council said "we're disappointed with how slowly they moved" on the currency issue but cautioned reporters that immediate steps had not been expected.

 

Democrats complained that Hu offered no tangible progress on trade and Bush was not fighting hard enough for US workers.

 

Zhou Xiaochuan, head of China's central bank, said it was important to gauge progress on currency flexibility by looking at other markers, not just the yuan's exchange rate. He said changes to the financial system were helping to "lay the foundation for further market-oriented reforms."