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China's Hu arrives for US visit
Talks between presidents in Washington are expected to focus on the valuation of the Chinese currency.
Last Modified: 18 Jan 2011 21:32 GMT
The White House has said that China's human rights record will be on the agenda at talks [Reuters]

Hu Jintao, China's president, has arrived in the United States for a four-day state visit during which the valuation of the Chinese currency is expected to top the agenda at talks.

Hu was received by Joe Biden, the US vice-president, and his wife at Andrews Air Force Base, and later attended a private dinner at the White House on Tuesday evening with Barack Obama, the US president, Hillary Clinton, the US secretary of state, and Tom Donilon, the president's national security advisor.

Speaking to China Central Television (CCTV), Clinton said on Tuesday that "openness and transparency" are key to US-China ties.

"We want to start with a very open dialogue and to search for areas of common agreement and narrow the areas of differences," she said.

"There seems to be a sense here in Washington that they really need the Chinese to fulfill their agenda on the international stage, but it's been a rocky relationship," Al Jazeera's Patty Culhane reported from Washington DC.

The US has consistently criticised China for what it terms the undervaluing of the currency and as it prepared for Hu's arrival on Tuesday, the White House weighed in to the debate, saying that China must "do more".

"We believe that more must be done. that is an opinion that is held not just by this country, but by many countries around the world," Robert Gibbs, the White House spokesman, said.

In a rare interview with US newspapers earlier this week, Hu had rejected the US stance that the Chinese Yuan (RMB) was undervalued, and suggested that the the US dollar-based international currency system was a "product of the past".

In addition to trade and currency issues, Wednesday's summit with Obama will also tackle issues regarding the rebalancing of the world economy, tensions on the Korean peninsula and energy.

Al Jazeera's Culhane said that talks will focus on areas the two sides can agree on, citing a statement from Gibbs earlier in the week where he said the two countries were "cooperative, but also competitive".

Clinton echoed that sentiment on Tuesday, saying: "[O]n some issues, we know that there are very strong opinions on both of our sides. But we don't want anything to interfere with our continuing to
talk and our continuing to search for ways to find some common ground."

Moreover, both sides hold leverage when it comes to points of contention.

"China is by far the biggest foreign holder of US debt, and that is the leverage that China has. The US for its part says that it has its own leverage: China needs the US markets to stay open," Culhane said.


'Unfair advantage'

The currency issues will remain on centre stage, however, and on Monday a group of US senators increased the pressure after holding talks over a proposed bill to pressure China on the yuan.

They said it was vital for the US to pass legislation to punish China if it fails to allow its currency to rise in value rather than managing the rate, giving what they call an unfair advantage to the country in global trade.

"There's no bigger step we can take to preserve the American dream and promote job creation, particularly in the manufacturing sector ... than to confront China's manipulation of its currency," Charles Schumer, a Democratic senator, said on Monday.

The message to Hu is "we are fed up with your government's intransigence on currency manipulation. If you refuse to play by the same rules, we will force you to do so".

While any bill on the issue will have to pass through Congress and receive White House approval, which may be difficult given the presidency's preference for negotiations on the matter, the intent from US legislators to strike a tough tone is clear.

Hong Lei, a Chinese foreign ministry spokesman, said Beijing hoped US legislators would not sour the tone ahead of Hu's arrival, repeating that China was committed to reforming its exchange rate system.

"A great many factors have proven that the renminbi's [yuan's] exchange rate policy is not the main cause of the China-US trade imbalance," Hong said.

"We hope relevant US lawmakers ... avoid harming the overall interests of China-US economic and trade co-operation," he said.

'Important contributions'

The Chinese president admitted in an interview with the US-based Wall Street Journal and Washington Post newspapers that it would take a long time for the RMB to become a world currency, but defended China's currency and trade policies.

"China has made important contributions to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development," he told the two newspapers in a written interview.

On domestic inflation, which hit a 28-month high in November, Hu said that prices were "on the whole moderate and controllable".

He also struck a positive tone on US-China relations.

"We should abandon the zero-sum Cold War mentality" and "respect each other's choice of development path", he said.

The president suggested co-operation with the US in areas like new energy sources, clean energy, infrastructure development, aviation and space.

"Both sides should keep to the right direction in the development of our relations, increase exchanges, enhance mutual trust, seek common ground while reserving differences, properly manage differences and sensitive issues and jointly promote the long-term, sound and steady development of China-US relations."

Eswar Prasad, a Brookings Institution economist and former International Monetary Fund analyst, said Hu's generally conciliatory tone augured well ahead of his Washington meetings with the US president and other officials.

"Hu makes it clear that China intends to move forward on opening its markets, freeing up its exchange rate and restructuring its political system, but at its own pace and with little heed to external pressures for more rapid or broader reforms," he said.

Dinner controversy

A highly symbolic state dinner will be held in Hu's honour at the White House on Wednesday, but John Boehner, the newly elected Republican Speaker of the US House of Representatives, has turned down an invitation to attend.

Republicans have been critical of Obama's decision to hold a state dinner for his Chinese counterpart at a time when the US government has been criticising China on its human rights record.

Boehner will hold a "substantive meeting" with President Hu later in the week, a spokesman for Boehner said.

Gibbs, the White House spokesman, has defended the decision to hold the dinner, saying that it would not cause the US government to mute its criticism of Beijing on human rights.

"We will continue to have difficult conversations, but necessary conversations that have to be had with China and we'll do that again tomorrow," he said.

"In order to make progress on certain issues you've seen the two countries work together, despite, again, continuing to have differences on things like continued economic growth and human rights."

Source:
Al Jazeera and agencies
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