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Obama Warns U.S. Will Get Tough On Trade With China

U.S. President Barack Obama (right) walks with Chinese President Hu Jintao during a welcoming ceremony at the Great Hall of the People in Beijing, November 2009.
U.S. President Barack Obama says his administration is putting increased pressure on China to open up its domestic market further to reciprocal trade.

Speaking at a Washington meeting with Democratic Party senators on February 3, Obama said that if the United States can increase its trade with Asia by even one percentage point, that will create thousands, maybe millions, of new U.S. jobs.

He said the important thing is to get Beijing to live up to existing trade rules. "The approach that we are taking is to get much tougher about enforcement of existing rules," he said, "putting constant pressure on China and other countries to open up their markets in reciprocal ways."

Obama also raised the thorny issue of the exchange rate of the Chinese yuan, which for years U.S. officials have considered to be deliberately undervalued by China. Experts estimate the yuan is presently undervalued by about 30 percent overall against major world currencies and about 40 percent against the dollar.

This gives a dazzling price advantage to Chinese exports, and Obama said the problem must be addressed.

"One of the challenges that we have got to address internationally is currency rates and how they match up to make sure our goods are not artificially inflated in price and their goods are artificially deflated in price," Obama said. "That puts us at a huge competitive disadvantage."

The U.S. president has so far resisted pressure to designate the Chinese as currency manipulators, but the issue will come up for consideration again in April when the U.S. Treasury Department publishes its next report.

Obama says one thing he will not do is to impose U.S. protectionist measures against Chinese or other imports, saying he believes that "our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets. And Asia is going to be one of our biggest markets. And, for us to close ourselves off from that market would be a mistake."

Growing Tensions

Beijing has reacted angrily to Obama's assertions. Foreign Ministry spokesman Ma Zhaoxu told journalists that China is not deliberately pursuing a huge trade surplus with the United States. And he reiterated the standard Chinese line that the yuan is "balanced" in value, considering the state of the financial markets.

Ma said accusations and pressure do not help solve the problem.

The trade and currency issues are only one of the current irritants in U.S.-Chinese relations. Beijing is angry with Washington over a $6.4 billion U.S. arms package for Taiwan, which Beijing sees as a breakaway province. Ma said today that the government's decision to impose sanctions on U.S. firms selling arms to Taiwan is "appropriate."

There is also tension over U.S. criticism about Internet freedoms in China, after the American search-engine company Google threatened to leave China because of censorship and cyberattacks.

Another major irritant is looming in the shape of the Tibetan spiritual leader, the Dalai Lama, who is scheduled to travel to the United States later this month. China has warned Obama against meeting with the Dalai Lama during the trip, whom it considers a separatist.

White House spokesman Bill Burton said earlier this week that Obama had already told China's leaders he would meet the Dalai Lama and "intends to do so."

compiled from news agency reports