Obama in China faces tensions on trade and Tibet

By Caren Bohan

SHANGHAI (Reuters) - U.S. President Barack Obama faces tensions with China over trade and Tibet on his first visit to the emerging superpower for a summit that will grapple with economic imbalances and the future of the yuan.

Obama arrived in Shanghai, China's commercial hub, late on Sunday to torrential rain and is due to meet city officials and hold a town hall-style meeting with young people before heading to Beijing later on Monday.

Chinese state-run Internet sites have asked the public for suggested questions to quiz Obama with at the youth meeting, and many urged him to explain any plans to meet the Dalai Lama, the exiled Tibetan leader whom Beijing scorns as a "separatist."

These events will be a warm-up for Obama's summit with President Hu Jintao in the national capital on Tuesday that will cover trouble-spots such as North Korea and Iran, and efforts to forge a new climate pact.

Obama has said he will also raise the sensitive subjects of human rights, and sometimes tense trade ties and China's yuan currency, seen by U.S. industry as significantly undervalued and stoking unsustainable global economic imbalances.

"The president will be talking about balanced, strong sustainable growth and the policies that go into making that happen," a U.S. official told Reuters, though added they did not expect any tension over recent trade spats.

"We've had very good meetings with them around a variety of issues. We have a deep and broad economic relationship with them."

At a gathering of Asia-Pacific leaders in Singapore over the weekend, Hu pointedly ignored international calls for his government to help ease those imbalances by raising the value of the yuan, making Chinese exports relatively more expensive.

He and other senior Chinese officials have instead accused other countries -- implicitly including the United States -- of embracing damaging trade protectionism aimed at Chinese goods.

Obama's meetings with China's leaders are unlikely to yield any big policy shifts on the diplomatic and economic problems facing the two big powers, said Drew Thompson, an expert on China at the Nixon Center in Washington, D.C.

"This isn't a trip about deliverables," Thompson told reporters in Beijing, where he was visiting. "It's a trip about staying the course, keeping the two ships on the same course and not letting them bump into one another."

SHARP JABS OR SOFT STROKES

Having already made their gripes clear before the summit, Obama and Hu may avoid sharp public jabs as they focus on building goodwill.

Obama has cast his visit as an effort to win trust from a government and a public often wary of U.S. intentions toward the rising Asian superpower and world's third biggest economy.

The United States welcomed Beijing's growing global role and "does not seek to contain" it, Obama said in a tone-setting speech on Asian policy in Tokyo on Saturday.