WASHINGTON - PRESIDENT Barack Obama and China's President Hu Jintao on Friday agreed to forge 'more positive' ties between their giant nations in their first telephone call since the US leader came to power.

The conversation, 11 days into Mr Obama's presidency, followed sharp exchanges between the two sides over China's currency policy and calls from Beijing for a stepped up effort between the two giants to beat the economic crisis.

China's Hu urges Obama to resist protectionism BEIJING - CHINA president urged better ties with the United States in his first phone conversation with President Barack Obama, and called for both sides to resist trade protectionism, Beijing said on Saturday. Friday's conversation, 11 days into Obama's presidency, followed sharp exchanges between the two sides over China's currency policy, amid criticisms that China manipulates its yuan to boost its exports overseas. ... more

White House spokesman Robert Gibbs said that Mr Obama and Mr Hu spoke on Friday morning US time of their 'intention to build a more positive and constructive US-China relationship'.

'President Obama told President Hu that he looked forward to meeting with him and to early contacts and exchanges between senior officials of our two countries,' Mr Gibbs said.

'The two presidents discussed the international financial crisis and agreed that increased close cooperation between the US and China is vital.'

Mr Gibbs said that the two presidents agreed to work together on the international stage, specifically regarding Iran, Afghanistan and Pakistan, and on counterterrorism and climate change.

'President Obama expressed appreciation for China's role as Chair of the six-party Talks and the two sides affirmed the importance of denuclearisation of the Korean peninsula,' Mr Gibbs said.

The only sign that the two leaders had touched on trade and currency tension came when Mr Gibbs said Mr Obama 'stressed the need to correct global trade imbalances as well as to stimulate global growth and get credit markets flowing.'

There was no mention in the statement whether the US president also raised perennial US concerns with China on human rights, Tibet, religious freedom and Taiwan, which Bejing considers a renegade province.

Earlier in the week, the first exchanges between the new administration and Beijing were dominated by a spat over comments by incoming Treasury Secretary Timothy Geithner that China was manipulating its currency.

Mr Gibbs said Mr Geithner, in written comments to his Senate confirmation hearing, 'was restating what the president had said during the (election) campaign'.

'I think it's safe to say this administration will determine in the spring what that means.'

The Treasury Department issues twice-yearly reports on global currency policies. The next one is due in April, and a finding that China is 'manipulating' its currency to gain a trade edge could trigger US sanctions.

Under the former administration of George W. Bush, the Treasury stopped short of that designation despite furious complaints in Congress that China does indeed artificially weaken the yuan's value to boost its exports.

China denied it was manipulating the yuan, and said it had never done so to boost its trade performance.

Mr Obama this week faced more pressure from Congress in a hearing when organizations including Amnesty International and Reporters Without Borders demanding he push Beijing on what they said was backsliding on human rights.

Sino-US watchers have been eagerly awaiting the first contact between Obama and the Chinese for hints of how the crucial relationship will develop under his Democratic administration.

Secretary of State Hillary Clinton this week faulted the Bush administration for allowing US-China relations to slip too much into the economic sphere.

'We need a comprehensive dialogue with China,' Mrs Clinton said.

'The strategic dialogue that was begun in the Bush administration turned into an economic dialogue. That is a very important aspect of our relationship but it is not the only aspect.'

China is a priority for US foreign policy for a host of reasons, but not least because it is a one of the permanent five members of the United Nations Security Council.

Beijing's vote could be decisive to Mr Obama's aspirations of thwarting what the United States says is Iran's drive for nuclear weapons, and to muster international pressure on issues like Darfur and Zimbabwe.

China is also a key player in Washington's efforts to forestall North Korea's nuclear program through the six-party talks also involving Japan, South Korea, North Korea and Russia.

The two nations are also inextricably linked economically, with China a massive investor in the United States securities and bond markets.

Mr Obama took a harsh line towards Beijing during his election campaign, accusing Beijing of indulging in unfair trade practices but US presidents have a history of toning down the tough talk once they get into office. -- AFP