Bush and Hu fail to make progress on trade and Iran

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US President George Bush and his Chinese counterpart Hu Jintao held an apparently affable summit yesterday, marred only by the appearance of a heckler on the White House lawn.

But they made no visible progress in resolving the many differences - economic, financial and diplomatic - between the established superpower and its emerging Asian rival.

After an hour of talks, followed by a 200-guest official lunch at the White House, President Hu said the encounter had been "pragmatic and constructive". But on issues ranging from China's currency policy and its colossal bilateral surplus with the US, to the nuclear ambitions of North Korea and Iran, the two sides remained far apart.

President Hu promised that China would make efforts "to improve its exchange-rate regime, and assured Mr Bush that Beijing was not seeking an excessive trade surplus with the US.

But that is unlikely to satisfy the White House and critics on Capitol Hill, who say the gross under-valuation of the renminbi is responsible for America's colossal bilateral trade deficit - $200bn (£112bn) in 2005 - with China. Mr Bush told reporters after the meeting that both leaders regarded the deficit as "sustainable". Similarly on Iran, China would not embrace tough sanctions against the Islamic state, George Bush said only that both countries did not want Tehran to obtain nuclear weapons. On North Korea, President Hu rejected criticism that Beijing was not leaning heavily enough on the Communist regime in Pyongyang to drop its pursuit of nuclear weapons.

Before the two men got down to business in the Oval Office, President Hu had been welcomed at an elaborate and colourful ceremony for what was not quite a formal state visit, but one which came complete with a 21-gun salute on the White House south lawn. But the elaborately choreographed proceedings were disrupted as a woman heckler, who had made her way on to a press camera stand, railed in Chinese as Mr Bush's guest made his formal remarks. "President Hu, your days are numbered," she shouted, "President Bush, make him stop persecuting Falun Gong" - a reference to a spiritual sect which Beijing has banned.

Though broadcast live, the episode was later excised from Chinese television coverage. Some analysts issued dire warnings that the episode would cause grave annoyance to Beijing, which saw the high-profile trappings as recognition of China's importance on the world stage.

The woman was soon hauled away by secret service officers. But her outburst only underscored Mr Bush's own pointed words of welcome, praising China's huge economic strides, but adding that it "can grow even more successful by allowing its people to speak freely, and assemble and worship freely". A few minutes earlier, in a separate protocol gaffe, China's national anthem was referred to as the anthem of the Republic of China - the formal name of Taiwan, over which China claims sovereignty. China's formal name is the People's Republic of China.

Outside the White House hundreds of protesters meanwhile gathered in the sunshine, chanting and banging drums as they attacked China's human rights record and its policies on Tibet, Taiwan and the Falun Gong.

President Hu arrived here after touring the Boeing aircraft factory in Seattle, where he said China would need to buy 2,000 aircraft over the next 15 years.

Today he goes to Yale University in Connecticut - Mr Bush's alma mater - to give a major speech in which he will respond to US fears about the geopolitical impact of China's ascent to regional superpower status.

But those suspicions will not be easily allayed. By no co-incidence two US papers, the Wall Street Journal and the Washington Times, yesterday carried long articles about the Pentagon's new "hedging strategy" of increasing US forces in Asia to counter China's own military build-up.