Clinton courts Chinese people; tough mission nears

SHANGHAI (AP) - U.S. Secretary of State Hillary Rodham Clinton said Sunday that she would be pushing the Chinese for a "more balanced economic relationship" with the U.S. in upcoming economic and strategic talks in Beijing.

Those talks, to be co-chaired by Clinton and U.S. Treasury Secretary Timothy Geithner, are likely to be dominated by efforts to win China's support to punish North Korea for the sinking of a South Korean warship. But the U.S. officials will be focused on economic issues as well.

"For trade to work in any economy and for it to produce the benefits we know it can, there must be a level playing field where domestic and international companies can compete freely and openly," she told workers at a Boeing maintenance facility at Shanghai's Pudong Airport.

Geithner and Clinton are leading a delegation of nearly 200 officials to Beijing as part of an effort to help President Barack Obama deliver on his pledge to double U.S. exports within five years and create 2 million jobs.

One issue likely to come up is the trade advantage Beijing has because of an undervalued Chinese currency.

As the European financial crisis deepens, Beijing appears to be pulling back from expected moves to loosen its currency's peg to the U.S. dollar, saying the euro's slide to four-year lows against the dollar is putting too heavy a burden on its own exporters.

China has kept the yuan at a rate of about 6.83 per dollar for nearly two years, seeking to cushion its exporters from the global financial crisis. Some economists reckon the yuan is undervalued by up to 40 percent against the dollar, giving Chinese exporters an unfair advantage in overseas markets.

While trying to make progress on economic issues, Clinton will also be trying to win Beijing's support for punishing its ally North Korea.

She faces a hard sell convincing China's leaders that they should back U.N. penalties after an international investigation blamed North Korea for sinking a South Korean navy ship.

Her trip has been a hectic and intense three-nation journey to Asia. She stopped briefly in Japan on Friday, and her schedule put her in Beijing on Sunday and the South Korean capital of Seoul on Wednesday.

"Virtually every major challenge that we face in the world requires China and the United States to work together," she told staff at the U.S. Consulate General in Shanghai.

But the downed ship is crowding out all else on her agenda, even the high-level strategic and economic talks between the U.S. and China on Monday and Tuesday that were the main thrust of her trip.

The release Thursday of the report blaming the North changed all that. Now, her chief task is persuading China to go along with U.N. Security Council action against the communist nation.

An international team of civilian and military investigators said that a North Korean submarine fired a homing torpedo on March 26, ripping South Korea's 1,200-ton Cheonan in two. Fifty-eight sailors were rescued, but 46 died - South Korea's worst military disaster since the 1950-53 Korean War.

The U.N. Command began an investigation Saturday into whether the attack violated the Korean War truce agreement.

North Korea threatened Sunday to "crush" South Korea, calling its Cheonan report an "enormous fabrication" only designed to justify its attempt to invade the North in collaboration with the U.S.

"What kind of mercy is needed for this kind of warmongers?" the North's main Rodong Sinmun newspaper said in a commentary, carried by the official Korean Central News Agency.

North Korea has routinely accused Washington and Seoul of plotting to invade the nation, despite the repeated denials by the allies.

China is North Korea's primary ally and financial supporter. Beijing has been neutral on the conclusions of the report.

In Tokyo on Friday, Clinton said the evidence was "overwhelming" that North Korea was behind the sinking and that the reclusive communist country must face international consequences.

Chinese officials have appealed for calm and called the sinking "unfortunate." But they have stopped short of backing South Korea, instead reiterating long-standing views on the need to maintain peace on the peninsula. China is a veto-holding permanent member of the Security Council, so its backing for any action is critical.