China-US spar on currencies at APEC meet

SINGAPORE (Reuters) The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, pointing to tricky talks ahead for President Barack Obama when he flies to China to address economic tensions.
The discord surfaced at a summit of the Asia Pacific Economic Cooperation (APEC) forum in Singapore when a reference to market-oriented exchange rates was cut from a communique issued at the end of two days of talks. An APEC delegation official said Washington and Beijing could not agree on the wording.
Obama faces tensions with China over trade and Tibet on his first visit to the emerging superpower for a summit that will grapple with economic imbalances and the future of the yuan.
He arrived in Shanghai, Chinas commercial hub, late on Sunday to torrential rain and is due to meet city officials and hold a town hall-style meeting with young people before heading to Beijing later on Monday (today).
It also suggested investors should be cautious about betting on a yuan appreciation after a central bank statement last week appeared to give the green light for strengthening.
Obama touched down in Chinas financial hub after a flight from Singapore, where he and other Asia-Pacific leaders pledged to revamp the world economy but scuppered hopes that key climate change talks next month would end in a pact.
China has pledged to keep monetary policy moderately loose, and their concern is still the economic recovery, said currency strategist Enrico Tanu Widjaja at OCBC Bank in Singapore. They will probably let the yuan strengthen when they start tightening policy.
Chinese officials have grown testy about the pressure over the yuan. Chinese banking regulator Liu Mingkang told a forum in Beijing on Sunday that ultra-low interest rates in the United States were fuelling speculation in overseas asset markets and threatened the global economic recovery.
Obama pledged on Saturday to deepen dialogue with China rather than seek to contain the rising power, which is set to overtake Japan next year as the worlds second-largest economy.
But issues ranging from the yuan and trade tensions to human rights could complicate what many regard as the most important relationship of the 21st century.
With regards to trade, this is a difficult time for the US-China relationship, said Derek Scissors, trade economist at the conservative Heritage Foundation in Washington.
The signs are actually getting worse instead of better.
Chinese President Hu Jintao ignored the yuan issue in several speeches at APEC and focused instead on what he called unreasonable trade restrictions on developing countries.