Obama presses China's Hu on currency, rights

WASHINGTON Wed Jan 19, 2011 5:22pm EST

1 of 24. President Barack Obama gives his opening statement next to Chinese President Hu Jintao during a joint news conference at the White House in Washington January 19, 2011.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - President Barack Obama pressed Chinese President Hu Jintao on Wednesday to let the value of China's currency rise and delivered a firmer message on U.S. concerns over Beijing's human rights record.

Amid the pomp of a state visit, both leaders spoke glowingly about cooperation but made no major breathroughs on a range of disputes over trade and security that have strained relations over the past year.

Hu gave up little aside from $45 billion in export deals that seemed aimed at quelling anti-Chinese sentiment in the United States and allowing Obama to tout job creation as U.S. unemployment remains stubbornly above 9 percent.

"We've shown that the United States and China, when we cooperate, can receive substantial benefits," Obama said with Hu at his side at a White House news conference.

But Obama zeroed in quickly on one of the most sensitive disputes between the world's two biggest economic powers, telling Hu that China's yuan remains undervalued. Beijing's critics say its currency practices hurt the competitiveness of U.S. business by making its exports artificially cheap.

"There needs to be further adjustment in the exchange rate," Obama said bluntly.

Hu listened to Obama's complaints about the yuan during the news conference but pointedly did not comment, giving no clues about China's intentions on the hot-button issue.

MORE ASSERTIVE ON HUMAN RIGHTS

Obama took a more assertive stance on human rights than he did during his 2009 visit to Beijing, when critics at home said he was too deferential to his hosts. Still, he was measured in his words to avoid antagonizing China's communist leadership.

"I repeated to President Hu we have some core views as Americans about the universality of certain rights, freedom of speech, freedom of religion, freedom of assembly, that we think are very important and that transcend cultures," he said.

"I have been very candid with President Hu about these issues," he added.

Obama also urged Chinese dialogue with representatives of the Dalai Lama, the Tibetan spiritual leader widely admired internationally but regarded by Beijing as part of an illegitimate separatist cause.

Hu insisted China had made "enormous progress" on human rights but acknowledged "a lot still needs to be done," although he gave no specifics.

Obama said he and Hu agreed that North Korea must avoid "further provocations" and that U.N. sanctions on Iran must be fully enforced. U.S. officials have sometimes chided Beijing for not doing enough to help rein in Tehran and Pyongyang, whose nuclear ambitions worry the United States and its allies.

In a joint statement, Obama and Hu appeared to set aside recent rancor over North Korea, which caused alarm with the shelling of a South Korean island and claims of new nuclear advances. But it offered no new ways to contain Pyongyang.

Obama acknowledged the yuan had edged up against the dollar in recent months but said it was not enough. "So we'll continue to look for the value of China's currency to be increasingly driven by the market, which will help ensure that no nation has an undue economic advantage," he said.

In the joint statement, China said it remained committed to reforming its exchange rate policies and agreed to seek ways to create more balanced trade flows between the two countries.

Beijing has so far resisted demands for faster appreciation of its currency --a move that could help lower China's trade surplus with the United States, which Washington puts at $270 billion.

Congressional pressure is building for legislation to punish Beijing over its trade and currency policies. A group of 84 lawmakers urged Obama in a letter on Wednesday to tell Hu that "America's patience is near an end."

Welcoming Hu in a carefully choreographed ceremony, Obama hailed the event as a chance to demonstrate that the countries "have an enormous stake in each other's success."

Speaking later to a group of U.S. and Chinese business leaders, Obama pressed for a level playing field with China on trade, while Hu made the same appeal for Chinese companies operating in the United States.

The two countries used the summit to unveil a series of deals, including China's purchase of 200 Boeing aircraft. U.S. officials said the $45 billion in deals would support an estimated 235,000 American jobs.

China may hope the deals can help soothe the U.S. public's ire over job losses and trade deficits.

Obama told reporters some progress was made on thorny trade issues. He said China pledged improved U.S. access to bid for Chinese government contracts, estimated at some $80 billion annually, but more work was needed on intellectual property.

Obama wants to show he is serious about leaning on China for concessions that could boost the anemic U.S. recovery and reduce high unemployment -- both seen as crucial to his chances of re-election in 2012.

Hu was greeted with a 21-gun salute, honor guards and the playing of both national anthems in a show meant to convey recognition of China's growing international stature.

Hu had been expected to raise his worries about U.S. economic and security policies, including arms sales to Taiwan, the self-ruled island that China deems a breakaway province.

Beijing also wants the Obama administration's reassurances that China's big holdings of U.S. government debt are not threatened because of what some critics describe as loose U.S. fiscal policies.

(Additional reporting by Jeff Mason, Ross Colvin, Caren Bohan, David Morgan and Steve Holland in Washington, Ben Blanchard and Sui-Lee Wee in Beijing; Editing by John O'Callaghan and Frances Kerry)