By Martin Crutsinger
AP Economics Writer
Washington — President Barack Obama, opening two days of high-level talks with China, said the discussions could lay the groundwork for a new era of “sustained cooperation, not confrontation” in a relationship likely to shape the 21st century.
Obama said that Washington and Beijing needed to forge closer ties to address a host of challenges from lifting the global economy out of a deep recession to nuclear proliferation and global climate change.
“I believe that we are poised to make steady progress on some of the most important issues of our times,” the president told diplomats from both countries assembled in the vast hall of the Ronald Reagan Building.
Obama said he was under “no illusions that the United States and China will agree on every issue” but he said closer cooperation in important areas was critical for the world.
“The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world,” Obama said.
The discussions in Washington represent the continuation of a dialogue begun by the Bush administration, which focused on economic tensions between the two nations. Obama chose to expand the talks to include foreign policy issues as well as economic disputes over trade and currency values.
Secretary of State Hillary Rodham Clinton, welcoming the Chinese, said the two nations were “laying brick by brick the foundation for a stronger relationship.”
Treasury Secretary Timothy Geithner and Vice Premier Wang Qishan, China’s top economic policymaker, both spoke of promising signs that the global economy was beginning to emerge from its worst financial crisis since the Great Depression.
Geithner said that the so far successful efforts of the two economic superpowers to move quickly to deal with the downturns with massive stimulus programs marked a historic turning point in the relationship of the two nations.
Speaking through a translator, Wang said that “at present the world economy is at a critical moment of moving out of crisis and toward recovery.”
State Councilor Dai Bingguo said that the two countries were trying to build better relations despite their very different social systems, cultures, ideologies and histories.
“We are actually all in the same big boat that has been hit by fierce wind and huge waves,” Dai said of the global economic and other crises.
With the global economy trying to emerge from a deep recession, the United States and China have enormous stakes in resolving tensions in such areas as America’s huge trade deficit with China and the Chinese government’s unease about America’s soaring budget deficits.
Three years ago, then-Treasury Secretary Henry Paulson used the initial U.S.-China talks to press Beijing to let its currency, the yuan, rise in value against the dollar to make it cheaper for Chinese to buy U.S. goods.
U.S. manufacturers blame an undervalued yuan for record U.S. trade deficits with China — and, in part, for a decline in U.S. jobs.
While the U.S. trade deficit with China has narrowed slightly this year, it is still the largest imbalance with any country. Critics in Congress say that unless China does much more in the currency area, they will seek to pass legislation to impose economic sanctions on Beijing, a move that could spark a trade war between the two nations.
For their part, Chinese officials are making clear they want further explanations of what the administration plans to do about the soaring U.S. budget deficits. China, the largest foreign holder of U.S. Treasury debt — $801.5 billion — wants to know that those holdings are safe and won’t be jeopardized in case of future inflation.
AP writers Foster Klug and Steven Hurst in Washington and Joe McDonald in Beijing contributed to this report.