Page last updated at 07:09 GMT, Thursday, 4 February 2010

Obama vows 'much tougher' stance on US-China trade

President Barack Obama: "China is going to be one of our biggest markets"

President Barack Obama says he will be much tougher with China to make sure it opens its markets to trade with the US.

Mr Obama told Democratic Party senators that he would put "constant pressure" on China and other countries to stick to their side of trade agreements.

But he said he did not intend to take a protectionist stance towards China, warning that "to close ourselves off from that market would be a mistake".

Tension between the US and China has increased over arms sales to Taiwan.

Relations have also been strained by reports of Chinese cyber attacks on US-run websites and a planned visit to the US by the Dalai Lama.

Earlier, a Chinese foreign ministry spokesman warned Mr Obama that meeting the Tibetan spiritual leader would further erode ties.

"We urge the US to fully grasp the high sensitivity of the Tibetan issues, to prudently and appropriately deal with related matters, and avoid bringing further damage to China-US relations," Ma Zhaoxu said.

Exchange rates

At a meeting with Senate Democrats, Mr Obama was asked whether the US would cut ties with Beijing over ongoing trade disputes.

The president said he would continue to make sure that China and other countries abided by trade agreements, but warned it would be a mistake for the US to become protectionist.

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"The approach that we're taking is to try to get much tougher about the enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways," he said.

"But what I don't want to do is for us as a country or as a party, to shy away from the prospects of international competition.

"Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets," he added.

Mr Obama also said foreign exchange rates would be checked to ensure countries were not giving themselves an unfair advantage against the dollar.

"One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price," he explained.

Zuo Chuanchang, a researcher with the Academy of Macroeconomic Research, a Chinese think-tank, said a row over the Chinese yuan would not lead to a trade war.

"It is very normal to see some disputes between China and the United States, but this doesn't mean there will be a bust-up," he said, quoted by Reuters news agency.

"It's a political show, and it does really mean too much."

The BBC's Imtiaz Tyab in Washington says the president did not specifically mention the yuan, but the US has long pushed for Beijing to let its currency appreciate in value.

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