CHINA/US RELATIONS:AFTER MONTHS of testy relations, Chinese president Hu Jintao will hold talks with US president Barack Obama during a forthcoming trip to attend a nuclear security summit in Washington.
Mr Hu is also set to deliver a speech at the April 12th-13th meeting, which dozens of world leaders are expected to attend. China is a permanent member of the UN Security Council and the US needs its support to impose new sanctions against Tehran over its nuclear programme.
China’s attendance at the meeting is being read as a sign of closer relations between the US and China. The meeting comes after a tense few months, ever since a not-particularly-friendly visit by Mr Obama to Beijing late last year, when relations looked frosty.
Relations have been strained by issues such as negotiating sanctions on Iran, Washington’s decision to sell arms to self-ruled Taiwan, which China considers a renegade province, and Mr Obama’s meeting with Tibetan spiritual leader the Dalai Lama.
In the last few weeks, there have been signs of an easing of tensions.
There have been various friendly comments from both sides, although China’s currency remains a contentious issue between the two countries. Senior diplomats were unwilling to confirm if currencies would form a big part of talks between Mr Obama and Mr Hu. But it is hard to imagine how they might not do so.
Efforts to unite on sanctions on Iran have been the headline makers, but China’s undervalued currency is the major domestic political issue in the US where many lawmakers are pushing for China to be labelled a “currency manipulator”.
China has kept its currency, the renminbi or yuan, pegged against the US dollar since July 2008.
Every six months, the US Treasury is required by law to report on any countries that have been “manipulating the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair advantage in international trade”.
The value of China’s exports means they enjoy a competitive advantage head-to-head against US products, and means foreign investment is likely to flow into China.
By naming China as a currency manipulator, it could start a trade war between China and the US. However, Treasury secretary Tim Geithner said last weekend that he would delay the report to Congress, a sign that Washington wants to draw Beijing closer.