Chinese Premier plays down trade rift with US

Chinese Premier Wen Jiabao has expressed optimism that the United States and China would resolve major trade frictions, even as he rejected US claims that Beijing's currency policies cost American jobs.

Despite sometimes tough words, Mr Wen used much of a speech on the sidelines of a United Nations global summit to try to ease US anger against China ahead of today's meeting with President Barack Obama.

Relations between the powers have suffered recently, but Mr Wen sought to play down economic, military and diplomatic tensions.

The United States and China, Mr Wen told business leaders gathered at the Waldorf-Astoria hotel, are "not rivals in competition but partners in cooperation".

Mr Wen, however, pushed back against US claims that Beijing's tightly regulated, undervalued currency - the yuan - gives China's exporters an artificial advantage over US manufacturers.

Ahead of US congressional elections in November and at a time of high American unemployment, China's economic and trade policies are a major friction in ties with Washington.

Mr Wen warned that China's currency must not be turned into a political issue between the countries. He saw no link between the yuan's value and China's trade advantage over the United States.

The politically sensitive US trade deficit with China jumped to €26.2bn (€19.5bn) in June, the largest one-month gap since October 2008.

"We do not seek a trade surplus," Mr Wen said through an interpreter. Many Chinese companies, he said, would go bankrupt and workers would suffer if the Chinese currency rose drastically.

The Obama administration must balance pressure on Beijing's economic policies with its desire for Chinese help in settling nuclear standoffs with North Korea and Iran and on other global initiatives.

China is a veto-wielding member of the UN Security Council and recently passed Japan as the world's second-biggest economy.