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BEIJING, Feb 12 U.S. President Barack Obama plans to meet Tibetan spiritual leader the Dalai Lama on Feb. 18, a move immediately denounced by China. [ID:nTOE61B002]
The Obama administration delayed meeting the Dalai Lama, who has lived in exile since a failed Tibetan uprising in 1959, until after Obama's November visit to Beijing so as not to inflame tensions with China, which accuses the monk of separatism.
With the two giant nations joined at the hip economically, Sino-U.S. tensions are unlikely to escalate into outright confrontation, but could make cooperating on global economic and security issues all the more difficult.
Here are the main sources of tension:
CURRENCY AND DEBT
The United States complains that China keeps its currency artificially undervalued, thus unfairly helping exporters.
China has unofficially pegged the yuan CNY=CFXS to the dollar since mid-2008, meaning its currency has weakened against other trade partners as the value of the dollar has slid. Beijing is concerned the value of its dollar holdings could be eroded by massive debt issuances to fund the U.S. stimulus. China held $789.6 billion in U.S. Treasuries at end-November, displacing Japan in September 2008 as the largest foreign holder.
U.S. lawmakers want to take action on the yuan, but U.S. law makes it difficult to investigate alleged subsidies. [ID:nN20226990]
Rash U.S. moves that threaten China's massive purchases of U.S. debt, and its funding of the U.S. deficit, are unlikely.
TRADE AND INVESTMENT
A World Trade Organisation panel is judging U.S. duties on Chinese tyres, after the United States for the first time imposed safeguard duties agreed to when China joined the WTO.
Other trade disputes centre around steel products, poultry, Chinese tariffs on raw materials exports, and quality and safety concerns over Chinese-made food, toys and other goods that Chinese manufacturers view as a type of protectionism.
U.S. firms investing in China complain about intellectual property theft, murky regulations, corruption and unfair advantages enjoyed by domestic rivals.
China complains about investment barriers on the U.S. side, citing resource investments blocked on national security grounds.
In 2009, U.S. exports to China totalled $77.4 billion, but were dwarfed by $220.8 billion in exports from China to the United States, Beijing's second biggest trade partner. Falling demand thanks to the financial crisis narrowed the trade gap.
DIPLOMATIC AND MILITARY INFLUENCE
Exiled Tibetan spiritual leader the Dalai Lama makes frequent visits to the United States, and is due to meet U.S. President Barack Obama on Feb. 18. China fears that ethnically distinct Tibetan areas will strive for independence, taking with them one-sixth of China's current territory -- an area rich in minerals and water resources.
Taiwan remains a sore point. China has threatened sanctions against companies making weapons or planes involved in the U.S. plan to sell $6.4 billion of arms to Taiwan. [ID:nLDE614203]
Beijing has never renounced the use of force to bring self-ruled and democratic Taiwan, which it considers its sovereign territory, under its rule. The United States is legally obliged to help the island defend itself.
As China has grown to the world's third-largest economy, it is gaining greater clout, especially in Asia and Africa.
It is also upgrading its military and space capability, and Washington has said Beijing should be more open about its defence spending and strategic intentions.
China is wary of the United States' global military strength. U.S. patrols in waters China considers its exclusive zone led to minor incidents last year. In 2001 a U.S. spy plane was forced to land in China after colliding with a Chinese fighter.
China and the United States work together in talks over North Korea's nuclear weapons programme. China worries that if its neighbour collapses refugees could destabilise northeast China.
Washington also wants China to put stronger pressure on North Korea, as well as Iran, over their nuclear activities.
INTERNET FREEDOMS
U.S. Internet firms have fared poorly in China, which censors content and blocks many foreign websites, including popular social media such as Twitter and Facebook, and YouTube.
On Jan. 12, Google Inc (GOOG.O) said it might pull out of
the country after a sophisticated cyber-attack, adding that it
would seek talks about offering a legal, uncensored search
engine in China. [ID:nN12211882]
U.S. Secretary of State Hillary Clinton called on China to openly and thoroughly investigate the attacks and made a broad case for global Internet freedom on Jan. 21 [ID:nTOE60K02Y] (For more on U.S.-China relations, click [ID:nCHINA]) (Writing by Ben Blanchard and Lucy Hornby; Editing by Alex Richardson)