Obama backing down on China

China immediately hit back, denying that it manipulated its currency to get an unfair trade advantage. Within days, Vice President Joe Biden said on television: “There's been no judgment based in the administration that there has been a manipulation.” That word, he explained, “triggers within trade agreements certain responses.”

And President Obama himself telephoned Hu Jintao to give his Chinese counterpart further reassurances.

Obama has received much advice on the importance of China, including making that country the destination of his first foreign trip, but he has rejected it, deciding instead to visit Canada instead.

Even where telephone calls are concerned, he followed tradition by first calling Japanese Prime Minister Taro Aso before calling President Hu.

According to the White House, in the telephone conversation the two leaders pledged to “build a more positive and constructive U.S.-China relationship.” They discussed a wide range of issues, including global trade imbalances, and agreed to work together to stimulate economic growth and to smooth credit flows. They agreed to meet in April in London for summit talks on the economic crisis. Other issues discussed include the North Korean nuclear weapons program as well as Iran, Afghanistan and Pakistan, counterterrorism and climate change.

According to Xinhua, the official Chinese news agency, Obama had described the ties between the U.S. and China as the most important bilateral relationship for both sides-something that was not reported by the White House. What Geither said was based on campaign statements made by Obama, and the candidate had gone on to say that, if he became president, he would use “all diplomatic avenues available” to push for changes in China's currency practices. But that was before the onset of the global financial crisis. The last thing the United States needs now is a trade war with China.

China is already America's biggest creditor and Washington wants Beijing to continue buying its Treasury Bonds as the United States goes into massive deficit spending in order to stimulate the economy. Premier Wen Jiabao said Saturday that a stable yuan is in everyone's interests. He also said that whether China continues to buy American debt will depend on its need to protect the value of its foreign investments.

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