China-U.S. ties improving, Hu tells White House team

U.S. National Economic Council Chairman Larry Summers (L) shakes hands with Chinese Premier Wen Jiabao in Beijing September 7, 2010.

BEIJING (Reuters) - China and the United States said on Wednesday that their sometimes rocky relationship is sounder after talks in Beijing, with both putting an optimistic face on ties that have been jolted by economic and security tensions.

The friendly mood-music between two of the world's biggest economies came during talks between Chinese President Hu Jintao and two White House advisers, Deputy National Security Adviser Tom Donilon and National Economic Council Director Larry Summers.

Throughout 2010, Washington and Beijing have gone through bouts of friction over Internet policy, Tibet, U.S. arms sales to Taiwan, China's currency and Chinese territorial claims in the South China Sea. The gaping U.S. trade deficit with China, worth $226.9 billion in 2009, has fueled trade disputes.

President Hu is likely to visit the United States early next year, and he played down rifts in remarks to Donilon and Summers, who arrived in Beijing on Sunday for meetings with senior economic officials and diplomats.

"I've heard your discussions have gone well. I'm sure that this visit will certainly enhance mutual communication and mutual trust," Hu told them at the start of the talks, while reporters were briefly allowed in the meeting room.

"Since President Obama assumed office, China-U.S. relations have on the whole maintained healthy development thanks to the efforts of both sides," added Hu.

The three days of meetings ending on Wednesday included one between Summers and Zhou Xiaochuan, the head of China's central bank, which steers currency policy.

The Obama administration was also looking to smooth ties with Beijing, Donilon told Hu.

"Our discussions have been productive, detailed, far-reaching -- covering the full range of security and economic issues," said Donilon, who was seated next to Hu.

YUAN, SECURITY ISSUES

Among the issues discussed in Beijing were North Korea, Iran and global economic rebalancing, a spokesman for the U.S. National Security Council, Mike Hammer, said in a statement emailed to reporters. He gave no more details.

The Obama administration wants to "expand cooperation in the many areas where our countries' interests coincide while we speak frankly and with respect when we disagree," said Hammer.

A senior military official also said he hoped to keep dialogue with the United States open. The remark was unusually positive for the People's Liberation Army which was incensed when the Obama administration approved a massive arms sale to Taiwan at the start of the year.

China's military responded by suspending exchanges with U.S. counterparts, and has declined to resume them despite U.S. overtures, and even as diplomatic relations improved.

Xu Caihou, vice chairman of the Central Military Commission, told Donilon that China "hopes to keep dialogue and exchanges with the Unites States so as to improve mutual understanding and deepen trust," Xinhua reported. The report did not elaborate.

The areas of disagreement also probably included China's yuan currency, which Washington complains is held too low against the dollar, giving Chinese exporters an unfair advantage.

China unofficially pegged the yuan to the dollar from mid-2008 to mid-2010, so the currency weakened against other trade partners as the value of the dollar slid.

(Additional reporting by Ben Blanchard; Editing by Sugita Katyal)