China hits back at Obama over currency criticism

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YUAN SEEN AS UNDERVALUED
The Peterson Institute for International Economics estimated China's yuan was undervalued by about 30 percent against all world currencies and about 40 percent against the dollar.

Obama has twice declined to label China as a currency manipulator, but faces a third decision on that issue in April.

Finance ministers and central bank governors of the Group of Seven rich nations will discuss China's currency this weekend in Canada, a US Treasury official said.

Zuo Chuanchang, a researcher with the Academy of Macroeconomic Research, a think-tank under the National Development and Reform Commission, said a row over the yuan would not lead to anything like a trade war.

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

Mid-term elections for U.S. Congress later this year are likely to be a test of the popularity of the policies of the Obama administration. With economic concerns uppermost in many voters' minds, trade and currency tensions with China may become a electoral issue.

REVILED AS SEPARATIST
China on Wednesday warned Obama against meeting the Dalai Lama, reviled by Beijing as a separatist for seeking self-rule for Tibet. The meeting may happen as early as this month.

Beijing was already upset with Washington over a USD 6.4 billion US weapons package for Taiwan, the self-ruled island that Beijing deems a breakaway province.

China's foreign ministry spokesman said on Thursday the government's decision to impose unspecified sanctions on US firms selling weapons to Taiwan was an "appropriate" measure.

China has postponed a second round of free trade talks with Taiwan until after this month's Lunar New Year holiday, though the Taiwanese side is downplaying any political reason for the delay.

The latest flare-up in Sino-US ties also comes amid disagreements over Internet freedoms in China, after search engine Google Inc threatened to pull out over censorship and hacking attacks.

Beijing has become increasingly assertive about opposing the Dalai Lama's meetings with foreign leaders and the issue is a volatile theme among patriotic Chinese, who see Western criticism of Chinese policy in Tibet as meddling.