Strains Easing, Obama Talks With Chinese Leader

NEW YORK TIMES
BEIJING — Tensions between China and the United States have ebbed significantly in recent days, with an hour-long conversation between their two presidents Thursday night and the countries working together to deter Iran’s nuclear ambitions as the Obama administration backs off a politically charged clash over China’s currency.

In the call Thursday night, President Obama spoke by phone with Mr. Hu for about an hour — so long that Air Force One had to be held for 10 minutes on the tarmac at Andrews Air Force Base after landing so that Mr. Obama could finish up the conversation. Chinese television reported that Mr. Hu expressed a desire for healthier ties while stressing Beijing’s positions on Taiwan and Tibet, and the White House said Mr. Obama stressed for China press Iran on its nuclear ambitions to ensure the country “lives up to its international obligations.”

The warming trend that began earlier this week gained momentum on Thursday by the announcement that President Hu Jintao will attend Mr. Obama’s nuclear security summit meeting in Washington later this month. American officials had feared that Mr. Hu would skip the talks to convey China’s anger over recent diplomatic clashes, including a White House decision to sell arms to Taiwan and President Obama’s meeting with the Dalai Lama, the exiled Tibetan leader.

For now, the United States is setting aside the most potentially divisive issue, deferring a decision on whether to accuse China of manipulating its currency, the renminbi, until well after Mr. Hu’s visit, according to a senior administration official. That decision, the official said, reflects a judgment that threatening China is not the best way to persuade it to allow the renminbi to appreciate against the dollar.

Many economists expect China to act on its own to loosen the tight link between the renminbi and the dollar — a policy that keeps the currency’s value depressed and makes Chinese exports more competitive in global markets.

Still, the administration’s decision not to force the currency issue now could carry political risks at home. Lawmakers on Capitol Hill have introduced legislation calling for trade sanctions against China if it does not change its currency policy. And unions and manufacturers cite the undervalued Chinese currency as a major culprit for lost jobs.

On Wednesday, China appeared to throw its support behind new United Nations sanctions aimed at putting pressure on Iran over its nuclear program. The Security Council has been stymied by China’s insistence on diplomacy over sanctions. But in its own statements on Friday, the Chinese Foreign Ministry appeared to steer clear from any commitment for sanctions, saying that all parties should “step up diplomatic efforts, and show flexibility, to create the conditions to resolve the Iranian nuclear issue through dialogue and negotiation.” Still, earlier this week, Mr. Obama expressed optimism that the major powers could unite this spring behind a resolution that would apply new pressure on Iran over its nuclear program.

Mr. Hu’s visit will take place only two days before the Obama administration faces a deadline to decide whether to label China a “currency manipulator,” meaning that it intervenes in currency markets to gives its exporters an artificial advantage. Pressure in the United States has been building to take that step, which could initiate a Congressional process that would lead to slapping tariffs on Chinese imports.

But given the potential for embarrassing Mr. Hu — and for sending bilateral relations into another tailspin — the administration decided not to report on April 15, one of the deadlines set by Congress and the Treasury Department to issue a report on possible currency manipulation.

Although their telephone conversation did not touch on the issue of the renminbi, Mr. Obama and Mr. Hu reportedly talked about trade, the Iranian nuclear crisis and China’s positions on Tibet and Taiwan, which remains a paramount concern to the Chinese. “The Taiwan and Tibet issues are key to China’s sovereignty and territorial integrity, and relate to China’s core interests,” the state media quoted Mr. Hu as saying. “Appropriately handling these issues is key to ensuring the healthy and stable development of U.S.-China ties.”

Relations between the countries began to fray in November, soon after Mr. Obama went to China on a state visit that was more circumscribed than American officials would have liked.

In the months that followed, tensions increased. Chinese leaders threatened to punish the United States for a $6 billion weapons deal for Taiwan, and in February, China’s Foreign Ministry called in the American ambassador for a scolding about Mr. Obama’s meeting with the Dalai Lama, whom China calls a separatist.