China media praise Obama while rifts remain

Chinese state media praised US president Barack Obama on Wednesday for helping ease fears of China's rising strength, setting a guardedly upbeat tone at the end of a visit that exposed rifts over trade and currency policy.

The praise, coupled with warnings for Obama, came from the state news agency Xinhua at the end of a four-day trip that saw some expected sparring over the yuan currency. Washington says the yuan is held so low against the dollar it stands in the way of rebalancing the world economy.

"The West's perception of China has been changing gradually, and a positive turn has occurred as Obama has said more than once during his ongoing Asia tour that the United States would not seek to contain China's rise but welcome China as a strong and prosperous player in the community of nations," said the English-language Xinhua commentary.

Obama's words "forged a good starting point to further Chinese-US ties", it said.

Obama held talks with prime minister Wen Jiabao on Wednesday, giving him another opportunity to raise the economic and currency concerns he pressed with president Hu Jintao on Tuesday.

Obama made plain to Hu he wants movement on China's currency policy. But Hu, who is also the head of China's ruling Communist Party, avoided mentioning currencies in comments to reporters.

Wen, who is more deeply involved in day-to-day economic affairs, may have been more willing to grapple with Obama on currency and China's own gripes with US trade rules.

In their opening remarks before reporters, at least, both leaders stuck to friendly words. "Mutual trust will help us move forward, while misgivings will take us back," Wen said.

After the talks with Wen, Obama visited the Great Wall, for Chinese people a proud symbol of their heritage. He is then scheduled to leave for South Korea. Officials had yet to brief reporters about Obama's meeting with Wen.

For all the bright rhetoric, officials and experts from both sides have stressed Obama's visit will not bring about immediate policy shifts, or end friction over the yuan, US anti-dumping rules, and Washington's criticism of China's controls on citizens' rights and policies in Tibet.

"There will still be setbacks and even conflicts between China and the United States," said a commentary in the overseas edition of the People's Daily, the Communist Party mouthpiece.

"It will take the constant efforts of one or two generations, perhaps several, to bring stable progress to relations."

Such summits are about setting priorities for future dealings, not making immediate policy changes, said Jin Canrong, an expert on China-US ties at Renmin University in Beijing.

The issue of currencies has drawn testy comments from US and Chinese officials. China's Commerce Ministry on Monday rebuffed calls for the yuan to appreciate, signalling resistance to change foreign exchange policy.

Outside pressure has been building on Beijing to let the yuan rise after more than a year of it being nearly frozen in place against the weakening dollar, with the latest appeal voiced by the head of the International Monetary Fund on Tuesday.

But Chinese officials have swatted down speculation of any big moves soon, and the government appears likely to keep the currency on a tight rein at least until the middle of 2010 to cement the country's economic recovery.

"Any policy changes by China, including on the exchange rate, will be based on its assessment of its own interests, not on external pressure," said Jin, the professor.

Wen may have also given his own warning to Obama. In March, he took Washington to task over its fiscal policies, saying he was worried about the health of China's vast US assets. He repeated those worries at a summit in Africa this month.

China has amassed $2.27 trillion of foreign exchange reserves, the world's largest stockpile, and analysts think about two-thirds of this is invested in dollar-denominated assets.

The Xinhua commentary said the United States, and not only China, needed to absorb some lessons and "figure out effective new ways to tackle its own chronic problems".

It also warned that US mid-term congressional elections next year might encourage "more finger-pointing and protectionism" aimed at China.

Obama and Hu have said that strains over trade and US criticism of China's human rights restrictions should not overshadow cooperation.

Bonnie Glaser, an expert on China at the Center for Strategic and International Studies in Washington, D.C., said the statement issued by Obama and Hu underscored "the two countries have a lot of common interests, but it remains to be seen whether they can cooperate to advance them".

Obama's talks with the Chinese leadership also covered Iran and North Korea, both nuclear trouble-spots where Washington and Beijing say they want to work together, but disagree on how much pressure to apply. Wen visited North Korea early last month.

North Korea will also feature in Seoul, where Obama flies to later on Wednesday for meetings with South Korean leaders.