By Steve Holland and Paul Eckert
WASHINGTON (Reuters) - The United States urged China on Monday to spend more at home and export less to help restore a sustainable pace of global growth, saying the two countries shared common ambitions despite their divisions.
Opening two days of bilateral talks, President Barack Obama said the United States and China need to overcome mutual wariness and deepen cooperation on everything from the global economic crisis to climate change and North Korea.
"Let's be honest: we know that some are wary of the future," Obama said, acknowledging the two countries would never see eye to eye on every issue but should think of themselves as partners rather than rivals.
"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," he said. "That reality must underpin our partnership."
At the start of the U.S.-China Strategic and Economic Dialogue, both Obama and Treasury Secretary Timothy Geithner urged Beijing to encourage more domestic consumption but did not repeat previous appeals to revalue its currency, the yuan.
"As Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation, because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods," Obama said.
OBAMA RAISES HUMAN RIGHTS
Geithner similarly urged China to boost the world economy by encouraging domestic consumption and repeated a pledge to get U.S. deficits under control -- a message to the Chinese that the United States wants Beijing to feel confident that their U.S. investments won't lose value.
"China's success in shifting the structure of the economy towards domestic-led growth, including a greater role for spending by China's citizens, will be a huge contribution to more rapid, balanced and sustained global growth," he said.
The top Chinese official at the talks, Wang Qishan, said that China's efforts to stimulate its economy were working and this would help the U.S. and other major economies.
But U.S. manufacturing groups complain that China heavily subsidizes its exports including by keeping the value of its currency artificially low against the dollar.
"China's multiple predatory trade practices severely weaken America's domestic economy," said Kevin Kearns, president of the U.S. Business and Industry Council.
"The time for simply talking with China is long past. In fact, more chit-chat diplomacy is harmful to U.S. interests," he said in a statement as the talks opened.
The Obama administration has sought to tread gently on sensitive issues that have separated the two countries in the past, although the president risked Beijing's displeasure by urging it to respect its ethnic and religious minorities.
"Just as we respect China's ancient culture and remarkable achievements, we also strongly believe that the religion and culture of all peoples must be respected and protected, and that all people should be free to speak their minds," he said.
"That includes ethnic and religious minorities in China, as surely as it includes minorities within the United States."
The comments will be seen as a reference to unrest among ethnic Uighurs and Tibetans in western China and subsequent crackdowns from Beijing in 2008 and this year.
NORTH KOREA COOPERATION
Most of Obama's remarks focussed on the need to deepen cooperation to help restore economic growth because the current crisis knows no borders.
"That is why we must remain committed to strong bilateral and multilateral coordination," he said.
The U.S.-Chinese economic relationship is complicated. The United States has consistently been China's best customer for products from shoes to furniture, creating a yawning trade deficit that has caused economic and political friction.
The deep U.S. recession has forced many Americans to cut back on spending and boost savings. Still, the United States ran a record $268 billion (162 billion ound) trade deficit with China in 2008.
Secretary of State Hillary Clinton praised Chinese cooperation in dealing with North Korea's nuclear weapons but said the path ahead would not always be easy.
"We cannot expect to be united on every issue at every turn, but we can be of one mind and heart on the need to find this common ground as we build a common and better future."
The United States needs to sustain Chinese resolve over North Korea where tensions are escalating after several missile launches and the testing of a nuclear device in May.
Obama said the United States and China "must continue our collaboration to achieve the denuclearization of the Korean peninsula and make it clear to North Korea that the path to security and respect can be travelled if they meet their obligations."
He also called for greater unity on efforts to prevent Iran from acquiring a nuclear weapon and ending the suffering in Sudan's troubled Darfur region.
(Additional reporting by Glenn Somerville, Sue Pleming and Emily Kaiser; Editing by Kenneth Barry)
