US President Barack Obama on Tuesday launched into the formal business of his visit to China, sitting down with his opposite number Hu Jintao to discuss trade tensions and US calls for a stronger yuan.

Their talks follow Obama's town hall-style meeting with students in Shanghai on Monday where he acknowledged difficulties in China-US ties but said the world's number one and three economies need not be adversaries.

"I look forward to having an in-depth relationship," Hu told Obama at the start of their meeting at the Great Hall of the People in Beijing, following a formal welcome ceremony complete with a military honour guard and brass band.

"We believe strong dialogue is important not only for the US and China, but for the rest of the world," Obama replied.

Blatant protectionism?

Trade seems likely to top the agenda following a series of tit-for-tat moves in recent months that has sparked angry accusations from Beijing that the United States is engaging in blatant protectionism.

Washington has angered China in recent months by imposing tariffs on Chinese tyres and preliminary duties on some steel products. Beijing countered by launching its own probes into US car imports and chicken meat.

The two sides traded barbs again on Monday, with a Chinese commerce ministry spokesperson lamenting "an increasingly protective US" and US Commerce Secretary Gary Locke rejecting those comments just a few hours later.

Locke and his Chinese counterpart Chen Deming met on Monday ahead of the Obama-Hu talks, the Chinese government said in a statement, quoting Chen as saying protectionism is not the answer to global trade problems.

Chen said Washington and Beijing should "work together to take concrete measures to oppose trade protectionism and set an example for other countries". Currency manipulator

Obama is expected to counter by again urging China to reconsider the value of the yuan, which has been effectively pegged to the dollar since July 2008, when the global crisis hit key export markets for Chinese-made goods.

Washington has stopped short of calling China a currency manipulator, but has urged Beijing to relax its exchange rate regime, hinting that it keeps the value of the yuan artificially low to boost exports.

Environmental activists had held out high hopes that Obama and Hu, whose countries are the world's top two emitters of greenhouse gases, would reach some kind of climate change deal before global talks in Copenhagen next month.

But that seemed unlikely after Asia-Pacific leaders conceded in Singapore that they would not reach a binding pact in the Danish capital.

Obama, criticised at home for not meeting the Dalai Lama during the exiled Tibetan spiritual leader's recent visit to Washington, has vowed to raise human rights issues with Beijing, but said he would do it without "rancour".

On Monday, the US president pushed for expanded political freedoms and spoke out against censorship in a town hall-style meeting with university students in Shanghai broadcast live on the Internet.

Some of those comments were carried in the official English-language China Daily on Tuesday, but the Chinese state media on the whole remained mute about Obama's more sensitive remarks.

Obama and Hu are also expected to discuss the controversial nuclear programmes of North Korea and Iran.

The pair are to make statements to the press following their talks. Obama is then to visit the Forbidden City and meet parliamentary speaker Wu Bangguo before a lavish state dinner hosted by Hu.

The US president wraps up his visit to China on Wednesday with talks with Premier Wen Jiabao and a visit to the Great Wall. He then heads to South Korea, the last stop on his four-country tour of Asia.

AFP

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