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Obama Meets Wen As China Visit Winds Down

U.S. President Barack Obama tours the Great Wall today.
BEIJING (Reuters) -- U.S. President Barack Obama continued courting China in talks with Prime Minister Wen Jiabao today, opening an opportunity to press him on the economic and currency strains that have shadowed his goodwill visit.

Obama's first trip to China has been a mix of goodwill displays toward its sometimes wary people and leaders and closed-door discussions focused on the two big powers' vast and increasingly complex relationship.

Today was no different. Obama held talks with Wen and was then scheduled to visit the Great Wall, for Chinese people a proud symbol of their imperial heritage. He is then scheduled to leave for South Korea.

The meeting with Wen, the head of the Chinese government, gave Obama a chance to raise touchy economic and diplomatic issues behind closed doors. But in their opening remarks before reporters, at least, both leaders stuck to upbeat phrases.

"Mutual trust will help us move forward, while misgivings will take us back," said Wen.

Obama already made plain in a summit with President Hu Jintao on November 17 that he wants movement on China's currency policy. Many in Washington believe Beijing keeps the yuan too low in value, putting competitors at a disadvantage and distorting global economic flows.

Hu, who is also the head of China's Communist Party, avoided mentioning the yuan or the dollar in his comments before reporters.

But 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 U.S. trade rules.

Setting Direction

Officials and experts from both sides have stressed, however, that Obama's visit will not bring about immediate policy shifts.

"There will still be setbacks and even conflicts between China and the United States," said a commentary in the overseas edition of China's official "People's Daily." "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-U.S. ties at Renmin University in Beijing.

The issue of currencies has drawn testy comments from U.S. and Chinese officials. China's Commerce Ministry on November 16 rebuffed calls for the yuan to appreciate, signaling 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 dollar, with the latest appeal voiced by the head of the International Monetary Fund on November 17.

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 also have his own economic warning for Obama. In March, he took Washington to task over its fiscal policies, saying he worried about the health of China's vast U.S. 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.

Obama and Hu have said that strains over trade and U.S. 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 have also covered Iran and North Korea, both nuclear trouble-spots where Washington and Beijing say they want to work together, but often 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 today for meetings with South Korean leaders.

North Korea toned down hostile rhetoric a day ahead of Obama arriving in Seoul, saying in an official newspaper on November 17 that it wanted better ties between the two, divided Koreas.