Chinese President Hu Jintao urged an end to a zero sum Cold War relationship with the United States and proposed new cooperation, but resisted U.S. arguments about why China should let its currency strengthen.
Hu, who will visit Washington this week, struck an overall upbeat tone about ties with the United States in a rare written interview with two U.S. newspapers, the Wall Street Journal and the Washington Post.
We should abandon the zero-sum Cold War mentality, he declared, and respect each other's choice of development path.
Hu suggested cooperation with the United States in areas like energy, infrastructure development, aviation and space. He was reassuring about the outlook for resolving tensions on the Korean peninsula, an area of concern to both Washington and Beijing.
But he also indicated he does not accept U.S. arguments for Beijing to let its currency appreciate. Critics say China's undervaluing of the yuan gives it an unfair price advantage in international trade.
Last week U.S. Treasury Secretary Timothy Geithner said China would be better off letting its currency strengthen to cap inflation.
But Hu said China is fighting inflation with a whole range of policies, including interest-rate increases, and inflation can hardly be the main factor in determining the exchange rate policy.
He also suggested that inflation was not a big headache, saying prices were on the whole moderate and controllable.
We have the confidence, conditions and ability to stabilize the overall price level, Hu said.
U.S. lawmakers are among the biggest critics of China's exchange rate policy. Three Democratic senators -- Charles Schumer, Debbie Stabenow, and Bob Casey -- said on Sunday that they would propose legislation to try and fix the problem.
The legislation would give the U.S. Treasury Department less flexibility when citing other countries for currency manipulation, and impose stiff new penalties on countries that are designated, a statement from the senators said.
Hu, however, called the U.S.-dollar-dominated international currency system a product of the past. He added that it would be a fairly long process to make China's own currency an international one.
He also said the liquidity of the U.S. dollar should be kept at a reasonable and stable level.
The Chinese president responded to complaints that China does not always treat foreign companies in China fairly. All foreign companies registered in China are Chinese enterprises, Hu said.
Their innovation, production and business operations in China enjoy the same treatment as Chinese enterprises, he said.
Questions were submitted to Hu by the two U.S. newspapers in December, and the answers were released by the Chinese government on Sunday, The Washington Post said. It posted the full, unedited transcript of the answers here 6/AR2011011601921.html
Hu said he sees signs of relaxation in tensions between North and South Korea, an issue of major concern to both Washington and Beijing.
Thanks to joint efforts by China and other parties, there have been signs of relaxation, Hu said. He added that he was convinced an appropriate solution to the Korean nuclear issue could be found, a reference to North Korea's nuclear arms programs.