Obama sets off for Asia, China looms large

President Barack Obama left for Asia on Thursday with the US economy, jobs and a yawning trade deficit with China looming large on his agenda.

Global climate change, the North Korean and Iranian nuclear disputes and Obama's review of his Afghanistan strategy are also major topics for his talks with the Chinese and other officials on the first trip to Asia of his presidency.

"I will be meeting with leaders abroad to discuss a strategy for growth that is both balanced and broadly shared," Obama said at the White House before departing for Japan, underlining the economic focus of his week-long trip.

"It is a strategy in which Asia and Pacific markets are open to our exports and one in which prosperity around the world is no longer as dependent on American consumption and borrowing but rather on American innovation and products."

In an interview with Reuters this week, Obama described China as a "vital partner, as well as a competitor."

But he warned of "enormous strains" in relations between the world's two most powerful nations if economic imbalances between them were not corrected.

Those imbalances — America's excessive consumption and borrowing, facilitated by China's aggressive export strategy and purchases of US debt — are seen by many as a major cause of the boom and subsequent bust in the global economy.

Obama's nine-day tour includes a stop in Singapore for the Asia-Pacific Economic Cooperation summit, followed by visits to Shanghai, Beijing and Seoul.

Obama said he would talk to the Chinese about revaluing their currency, the yuan, as well as encouraging Chinese consumers to spend more and opening Chinese markets further to US goods.

With the US unemployment rate now at 10.2%, the Obama administration hopes an emphasis on building export opportunities will play well at home.

Giving Obama a possible boost ahead of the trip, China signaled on Wednesday it might allow appreciation of the yuan, saying it would consider major currencies — not just the dollar — in guiding the exchange rate.

Soaring US budget deficits have weakened the dollar because of US borrowing to meet the day-to-day spending needs of the United States. The dollar has declined against a basket of major currencies since mid-February.

US manufacturers have long complained that Beijing artificially holds down the yuan's value to make Chinese exports cheaper and US goods more costly for China.

But Obama may face some pushback from China and other countries who worry that Washington's drive for economic cooperation with Asia may be too one-sided.

Beijing is upset over US moves to slap tariffs on Chinese tires and steel pipes, while South Korea and other countries harbor doubts over whether Obama, elected with strong labor union support, is committed enough to a free-trade agenda.

The Asia tour also comes as Obama juggles many pressing domestic issues, including his drive to pass healthcare reform and climate change legislation, and nears the final stages of a decision on whether to send more US troops in Afghanistan.