China tells United States to handle ties with care

BEIJING- China's Foreign Minister has urged U.S. Secretary of State Hillary Clinton to be careful with sensitive issues that could strain ties, calling the relationship between their two nations one of the world's most important.

Foreign Minister Yang Jiechi made the remarks to Clinton, settling into her new job as Washington's top diplomat, in a phone call on Friday, the Chinese Foreign Ministry website (www.fmprc.gov.cn) reported on Saturday.

But Yang's published remarks did not mention the yuan currency issue, which has become the first test for ties between his government and the new Obama administration.

"The China-U.S. relationship is one of the world's most important bilateral relations," Yang told Clinton, according to the report.

Each side should "respect and show consideration for the other's core interests and appropriately handle differences and sensitive issues," he said.

The report did not specify those issues, but Beijing considers Taiwan its most sensitive topic in dealings with Washington.

Beijing says self-ruled Taiwan must accept eventual reunification with the mainland and objects to Washington's military aid to and political support for the island. China has also been angered by U.S. pressure over human rights and Tibet.

Yang, a former ambassador to Washington, said the two powers should "handle bilateral relations by adhering to a strategic high-point and a long-term perspective."

TRADE DISPUTES

Ties between the United States, the world's biggest economy, and China, with its bulging exports and foreign exchange reserves, have also been strained by trade disputes that could worsen during the global economic slowdown.

But in the published comments, Yang did not mention the yuan currency exchange policies, which have already become a sparring point between China and the new Obama administration.

U.S. Treasury Secretary-designate Timothy Geithner said on Thursday that China was manipulating its currency to shore up unfair trade advantages.

China's Commerce Ministry, in a statement to Agence France Presse on Friday, said the Beijing government "has never used so-called currency manipulation.

China's Foreign Ministry generally avoids wading into trade issues. But the country's official media were not so reticent.

The China Daily, an English-language paper that often reflects official policy, said Geithner's position was "a clear move away from the stance of the Bush administration," which avoided calling Beijing a currency manipulator.

The official Xinhua news agency echoed that view.

"This may signal that with the Obama administration in office, China faces growing pressure from U.S. trade protectionism," it said, citing Beijing economists.

The People's Bank of China, the central bank, was preparing a response to Geithner's remarks, Xinhua said.

The yuan closed lower against the dollar on Friday and traded mostly below the Chinese central bank's mid-point, with speculation that Geithner's comments could spark a brief period of modest yuan depreciation.