U.S. President Barack Obama on Saturday used a Pacific Rim summit to press China on its flood of exports aided by a cheap yuan, but President Hu Jintao said Beijing would make reforms at its own pace.
The competing visions of the two economic giants were laid out a day after the Group of 20 knocked back U.S. proposals for binding targets to address global trade imbalances and curbs on currency manipulation -- proposals effectively aimed at China.
Mr. Obama also made an appeal to tear down trade barriers as the 21 members of the Asia Pacific Economic Cooperation (Apec) forum kicked off a summit in Japan, clouded by tensions between its biggest economies.
Voicing support for an emerging treaty that would group countries on both sides of the Pacific, Mr. Obama said “the security and prosperity of the American people is inextricably linked to the security and prosperity of Asia”.
But in comments directed at the world's top exporter China, he also said that “countries with large surpluses must shift away from an unhealthy dependence on exports and take steps to boost domestic demand”.
“No nation should assume that their path to prosperity is simply paved with exports to America,” said Obama, who just suffered heavy losses in midterm elections dominated by claims that Chinese imports destroy American jobs.
Washington has urged Beijing to allow its yuan to rise, claiming it is undervalued to create an unfair trade advantage -- although the United States has been accused of doing the same by diluting the value of the greenback with a $600-billion cash injection announced this month.
Mr. Hu, speaking at the same Apec business forum as Mr. Obama, insisted he would pursue gradual currency reform and efforts to promote free and balanced trade, and that other countries should not ask for too much too fast.
“We will continue to steadily move forward the reform of the renminbi exchange rate regime in a self-initiated, controllable and gradual manner,” Mr. Hu said.
“To ask [emerging markets] to take on responsibilities and obligations beyond their capabilities and development stage will do no good to international cooperation and world economic development.
On the tit-for-tat currency allegations between the United States and China, IMF chief Dominique Strauss-Kahn noted dryly that “everyone thinks that others should make more effort than oneself”. China's efforts to switch its economy towards domestic demand “will not happen in five minutes but it must be done as soon as possible,” he told AFP. “On the other hand, it is also necessary for the developed countries to make efforts to modify their own deficits. Everyone has their job to do at home.
Mr. Hu also reiterated China's commitment to “peaceful development” at a time when Beijing and Tokyo have been engaged in a bitter territorial dispute sparked by Japan's arrest of a Chinese fishing captain in September.
In a diplomatic breakthrough Saturday, Mr. Hu and Mr. Kan held formal talks, their first since the row started, and emerged with warm comments that represented a major thaw.
Mr. Hu said the two countries should “follow a road of peace, friendship and cooperation,” China's Foreign Ministry said on its website.
He noted that the two nations are each other's main trading partner, and that they should deepen cooperation “to jointly contribute to Asia's revitalization and address global challenges”. Mr. Kan spoke of Japan's “firm stance” on the disputed islands, a Japanese official said, but both leaders “agreed that a long-term stable, mutually beneficial relationship should benefit the two countries and is important for the peaceful development of the region”.
Mr. Kan also met President Dmitry Medvedev to discuss a separate row that started when the Russian leader on November 1 visited an island chain disputed between Moscow and Tokyo since World War II.