China has strongly defended its economic policy after President Obama threatened to get tough on trade and exchange rates.
In a sign of increasing tension between the two giants the White House warned the Chinese to respect existing agreements.
But Beijing has dismissed the threat. Earlier, the country’s foreign ministry spokesman hit back, insisting the present Chinese currency rate was ‘reasonable and balanced.’
That is unlikely to satisfy politicians in Washington who say they intend to put pressure on China to open up its markets.
‘‘One of the challenges that we’ve got to address internationally is currency rates and how they match up, to make sure our goods are not artificially inflated in price and theirs are artificially deflated in price. That puts us at a huge competitive disadvantage.’‘
Ties are already strained on several fronts, including Obama’s plans to meet the Dalai lama.
In addition, relations have been further soured by a recent 4.6 billion euro arms deal between Washington and Taiwan. China has already indicated unspecified sanctions on US firms selling weapons to Taipei.