Chinese President pledges concessions on US trade

Chinese President Hu Jintao pledged to President George W. Bush yesterday that China would make its currency more flexible and take other steps to reduce a huge trade surplus with the United States.

After a pomp-filled White House welcoming ceremony complete with a 21-gun salute and full military honours, Mr Bush and Mr Hu held less than an hour of talks. Both said their bilateral relationship had matured to the point where they could discuss differences openly.

"He tells me what he thinks, and I tell him what I think, and we do so with respect," Mr Bush said.

Mr Hu said China wanted to boost its domestic demand and did not seek an excessively large trade surplus.

Washington would like to see China revalue its currency, the yuan, which it regards as seriously undervalued against the dollar. That would allow US exporters to compete more effectively in the Chinese market and help reduce a trade deficit that reached $202 billion last year.

Mr Hu said China would continue to improve the yuan's exchange rate, although he gave no specifics. But on Wednesday, he ruled out any radical revaluation of the currency.

The Chinese leader said he believed trade frictions could be resolved through negotiations on an "equal footing." He said one way the United States could reduce the deficit would be by relaxing controls on high-tech exports to China.

Mr Bush said he hoped China would do more on its currency. "Obviously the Chinese government takes the currency issue seriously and so do I," he said.

Mr Hu also responded to another major US concern, saying China was trying to stem the illegal piracy of American software and DVDs.

Turning to foreign affairs, Mr Bush did not appear to have persuaded China to allow tougher steps within the UN Security Council to confront Iran's nuclear ambitions. He said he would "continue to strategise" on the issue with Mr Hu.

Mr Bush also asked China to lean more heavily on North Korea to give up nuclear weapons. "I continue to seek President Hu's advice and cooperation and urge his nation to use its considerable influence with North Korea to make meaningful progress toward a Korean peninsula that is free of nuclear weapons," he said.

Mr Hu acknowledged that six-party talks on Korea had "run into some difficulties" and urged the parties to show flexibility.

Mr Hu's arrival ceremony on the White House South Lawn did not go entirely as planned. As he began his response to Mr Bush's welcome, a Chinese woman in the press section began shouting anti-Chinese slogans and was led away by a uniformed guard.

"President Hu, your days are numbered. President Bush, make him stop persecuting Falun Gong," she yelled, referring to the spiritual meditation movement that is banned in China.

Mr Hu's visit drew hundreds of protesters, from the yellow-clad Falun Gong disciples to Taiwanese nationalists waving green flags and Tibetan youth groups.

"Communist Party = Tyranny + Lies," read a yellow banner, carried by female member of Falun Gong, which China outlawed and brutally crushed in 1999.

"Taiwan is not a part of China," read a placard hoisted by one of around 300 Taiwan activists, who reject China's claim of sovereignty over the island. Tibetans, mostly US-based students, called for independence for their homeland.

Mr Hu pledged China would try to help resolve nuclear disputes with both Iran and North Korea but insisted on a diplomatic outcome. Mr Bush has refused to rule out military action against Iran, although he says he is currently pursuing diplomacy.

Mr Bush also reaffirmed the United States was committed to a "one China" policy and urged all parties to avoid confrontation over Taiwan.

As he was speaking, it was announced that Taiwan had bought a $9.3 million radar upgrade for its US-built F-16 fighter aircraft, that would boost pilots' ability to detect a range of incoming radar signals.

Mr Hu said China would make every effort for peaceful reunification of China and Taiwan but added, "We will never allow anyone to make Taiwan secede from China by any means."