September 15, 2008 / 5:24 AM / 9 years ago

Presidential hopefuls spell out China policy

<p>Soldiers stand guard in Tiananmen square in Beijing August 24, 2008.Grace Liang</p>

BEIJING (Reuters) - Presidential contenders John McCain and Barack Obama both vowed to press China on trade and to work with it on climate change if elected, and Obama said he would make shifting Beijing's currency policies a priority.

Democratic candidate Obama and Republican candidate McCain laid out their views on Beijing's rising diplomatic and economic power in position papers published by the American Chamber of Commerce in China on Monday (www.amcham-china.org.cn).

Both senators want China to grant citizens wider rights, but stressed security, economic and environmental issues that make ties between Washington and Beijing globally important and often contentious.

The U.S. trade deficit with China hit a record $256.3 billion in 2007. "Central to any rebalancing of our economic relationship must be change in currency practices," Obama said in his policy paper.

"I will use all the diplomatic avenues available to seek a change in China's currency practices," he said.

Obama said China pegs its yuan currency at an "artificially low rate," making its exports unfairly cheap.

He has backed legislation that would define currency manipulation as an illegal subsidy so that the United States could slap duties on more Chinese goods.

<p>Democratic presidential nominee Sen. Barack Obama and Republican presidential nominee Sen. John McCain (2nd are followed by Cindy McCain and New York City Mayor Michael Bloomberg as they descend a ramp into ground zero during the seventh anniversary September 11 Commemoration Ceremony in New York, September 11, 2008.Timoth A. Clary/Pool</p>

In his paper, McCain accused his Democrat rival of "preying on the fears stoked by Asia's dynamism," but the Republican candidate also said "China has its obligations as well".

"(China's) commitment to open markets must include enforcement of international trade rules, protecting intellectual property, lowering manufacturing tariffs and fulfillment of its commitment to move to a market-determined currency," McCain said.

The yuan has appreciated a further 18.47 percent since it was revalued by 2.1 percent to 8.11 per dollar in July 2005, and freed from a dollar peg to float within managed bands. Now one U.S. dollar buys about 6.85 yuan.

While the Republican and Democratic candidates have sparred over energy policy, they found some common ground in vowing to bring China into firmer international commitments to control greenhouse gases stoking global warming.

The U.S. and China are the world's two biggest emitters of the main greenhouse gas, carbon dioxide, and they will play a decisive role in negotiations to forge a global climate pact to build on the Kyoto Protocol, which expires in 2012.

China has insisted that, as a developing country, it must grow first and not accept any caps until wealthier. Washington has refused to ratify the Kyoto Protocol, noting it did not impose caps on China and other big, developing economies.

"Given the environmental challenges so evident in China today, pressing on with uncontrolled emissions is in no one's interest," said McCain. The U.S. could in turn "take the lead" in spreading low-carbon technology to poorer countries.

Obama said the two nations must "develop much higher levels of cooperation without delay" to produce new means of reducing the threat from climate change.

Reporting by Chris Buckley; Editing by Paul Tait

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