China's Hu tells Obama to curb trade safeguards

China's President Hu Jintao attends the annual Luncheon during the 64th United Nations General Assembly in New York September 23, 2009.

UNITED NATIONS (Reuters) - Chinese President Hu Jintao urged U.S. President Barack Obama not to slap duties on more Chinese goods after a dispute over tires but stressed hopes for steady economic ties ahead of a Group of 20 leaders' summit.

Hu and Obama met at the United Nations on Tuesday and their talks covered Obama's decision this month to place a 35-percent additional "safeguard" tariff on tire imports from China, a move Beijing condemned as protectionism that could cloud global economic recovery.

Obama and Hu, along with other world leaders, will meet again in Pittsburgh at the G20 summit of major rich and developing economies on Thursday and Friday.

The tire dispute has threatened to contradict any repeat by G20 leaders of previous vows not to resort to trade protectionism as a way to help their economies.

But mild-sounding published comments from Hu suggest China does not want the dispute to fuel wider contention with the U.S. at the summit.

Hu pressed complaints over the tire duties during his UN meeting with Obama, but stressed a conciliatory theme that the two countries could keep trade friction under control, China's Ministry of Foreign Affairs reported in a summary issued on its website (www.mfa.gov.cn) on Wednesday.

"The special safeguard measures the United States has taken against Chinese-made tires exported to the U.S. suits neither countries' interests, and similar cases should not recur," the report cited Hu as saying.

"China is willing to work with the United States to keep expanding mutually beneficial economic and trade cooperation, and to appropriately handle economic and trade friction through consultations on an equal footing," Hu added.

Obama imposed the tire tariffs under an anti-import surge mechanism known as Section 421, the first time Washington used the mechanism against China, which agreed to the measure as a price of its admission to the World Trade Organization in 2001.

China fears the safeguard rule could be used against other products.

Hu told Obama that "China-U.S. relations overall are developing in a healthy direction," and laid out areas with potential for better cooperation, among them energy, climate change, and international disputes, including North Korea and Iran, the Chinese report said.

Obama, who plans to visit China in November, also discussed with Hu a call for more balanced global growth that will feature at the G20 summit.

Some economists believe imbalances between export-driven economies, especially China, and consumption-driven economies, especially the United States, helped set the stage for the 2008-2009 financial crisis.

Hu did not directly address that issue in the comments issued by the Chinese Foreign Ministry.

But he indicated Beijing would have scant patience for criticism of its exchange rate policies, which some critics say have made Chinese exports excessively cheap, exacerbating those international imbalances.

Hu said China had actually done the world a favor by not shifting the exchange rate of its yuan, or Renminbi, currency.

"Since the outbreak of the financial crisis, China has maintained the stability of the Renminbi exchange rate in the face of economic hardships, and this was a contribution to Asia and the world," Hu told Obama, according to the Chinese report.