Amid a sudden upswing in relations, President Barack Obama and Chinese President Hu Jintao sought common ground Monday on Iran, agreeing that a set of potential sanctions should make clear to Iran the cost of continued nuclear defiance, a White House official said.
The two leaders, meeting on the sidelines of a US-hosted summit on nuclear proliferation, also discussed a currency dispute between the two nations but without announcing specific progress toward resolving it.
White House national security aide Jeff Bader said Iran was a major topic at the 1-1/2 hour session between Obama and his Chinese counterpart. "They're prepared to work with us," Bader said. He called it another sign of international unity on Iran.
The upbeat assessment reflected a recent warming of US-Chinese diplomatic ties.
Still, the meeting produced no breakthroughs. And Chinese spokesman Ma Zhaoxu did not mention sanctions in a statement on Hu's meeting with Obama.
Ma said China hopes all parties will step up diplomatic efforts and seek ways to resolve the Iranian nuclear issue through negotiations.
"China and the United States share the same overall goal on the Iranian nuclear issue," the Chinese statement said.
The US description of the meeting echoed recent comments from Secretary of State Hillary Rodham Clinton, UN Ambassador Susan Rice and others that the Chinese are now willing to talk about sanctions, although nothing about a specific commitment. They started working on language at the United Nations last week.
Bader said Hu and Obama instructed their aides to work with the group of nations directly overseeing the Iranian nuclear issue and with UN officials to come up with a sanctions resolution. "The resolution will make clear the costs of pursuing a nuclear program that violates Iran's obligations and responsibilities," he said.
China — as do the United States, Russia, Britain and France — holds veto power on the UN Security Council. It could block any sanctions proposal it does not like. In the past, both China and Russia have expressed reservations with some of the proposals issued by the United States.
On the currency dispute, Bader said Obama reiterated his view that there needs to be "a more market-oriented exchange rate."
US manufacturers claim China keeps its currency pegged to the dollar to make its exports cheaper. And Obama has publicly asked China to led its currency rise.
Analysts suggest China does not want to be seen as bowing to US pressure. Still, there have been recent signs that China is moving on its own toward allowing its currency to rise with market conditions.
The White House official called it a "positive and constructive" meeting, "a meeting without talking points" involving leaders who are "familiar and comfortable with each other."
He said the two leaders did break for a moment of silence to remember the deaths of 29 US miners in the worst US coal mining disaster since 1970.
The meeting came during a recent thaw in diplomatic exchanges between the two countries after a period of rising tensions aggravated by China's rigid currency policies, US arms sales to Taiwan, Obama's meeting with the Dalai Lama at the White House and US tariffs on Chinese tires.
Poised to soon surpass Japan as the world's second largest economy, China has softened its recent muscular rhetoric, muting criticisms of the United States as both nations seek to recover from economic troubles.
In a step further reflecting the recent thaw in relations, Treasury Secretary Timothy Geithner postponed until midyear a report that had been due this week that might have condemned China for manipulating its currency, as Geithner had asserted in the past.
That could have proved an embarrassment to China, with its president in Washington attending Obama's summit.
Geithner also made an unscheduled visit to China last week, following a trip to India, and met with Chinese Vice Premier Wang Qishan.
That led to an increase in speculation that China may be getting closer to allowing its currency, the yuan, also called the renminbi, to increase in value with market forces. A stronger yuan would cut import prices inside China.
There are mixed views within China on the value of keeping the currency tied to the dollar. A stronger yuan, for instance, would give China's central bank a freer hand to raise interest rates to combat inflation.
A move to let the yuan rise in value against the dollar would benefit US exporters. The undervalued Chinese currency has made Chinese goods cheaper for American consumers. But it has hurt US companies by making their products costlier in China.
Fred Bergsten of the Peterson Institute for International Economics
says the yuan is 25 percent to 40 percent undervalued against the
dollar. If the Chinese currency were to appreciate by that amount, he
estimates, it could generate 600,000 to 1.2 million US jobs.
Freeman, former assistant US trade representative for China affairs and
now with the Center for Strategic and International Studies, said there
has "definitely been a public warming in relations" between the US and
China in recent weeks. "And I think the private relationship is
Freeman said he expects the Chinese will soon act to let its currency rise. "It's been in the works for a long time," he said.
to future relations between the two economic superpowers, "We're always
going to have a bit of a roller coaster," Freeman said.