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China's top banking regulator issued a sharp critique of U.S. financial management only hours before President Barack Obama commenced his first visit to the Asian giant, highlighting economic and trade tensions that threaten to overshadow the trip.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said that a weak U.S. dollar and low U.S. interest rates had led to 'massive speculation' that was inflating asset bubbles around the world. It has created 'unavoidable risks for the recovery of the global economy, especially emerging economies,' Mr. Liu said. The situation is 'seriously impacting global asset prices and encouraging speculation in stock and property markets.'

His comments signaled that Mr. Obama -- on the third leg of a four-country Asian tour -- can expect blunt talk from Chinese leaders on the economy. The issue could complicate his broad agenda in China that also includes efforts to extract new commitments on climate change and to encourage them to take a more active role to defuse nuclear threats in Iran and North Korea.

Before heading to China, Mr. Obama underscored the urgency of his agenda on Iran by joining Russian President Dmitry Medvedev in warning Tehran that 'we are now running out of time.'

The trip has already had some hiccups. Wrangling between the administration and Beijing over Mr. Obama's town hall meeting with university students in Shanghai on Monday was intense, with China wanting to screen the audience and its questions, and the U.S. wanting a freer exchange.

Administration officials wound up emphasizing that the president would take questions not only from the audience but also from e-mails sent to the U.S. embassy. The event was to be broadcast live over the White House's Web site, whitehouse.gov, and the Chinese also agreed to broadcast it live locally on Xinhuanet, a site run by China's government-run news agency.

Differences over global economic management have been bubbling ahead of Obama's arrival on Sunday night. Chinese leaders previously expressed nervousness that the U.S. may be ready to sacrifice China's economic interests to haul itself out of the worst recession since World War II. China is the largest creditor to the U.S. It frets that huge U.S. budget deficits will weaken the dollar and slash the value of China's massive foreign-currency holdings, which hit $2.273 trillion at the end of September, the latest figure available.

Beijing's suspicions of U.S. intentions have been exacerbated by trade quarrels under the Obama administration.

These began in September, when U.S. decided to hit Chinese tire exporters with tariffs. The U.S. has since targeted Chinese steel pipes with tariffs, a decision that China denounced as 'abusive protectionism.'

The U.S. is now moving ahead with investigations into the alleged 'dumping' (or selling at below-market prices) of coated paper from China and Indonesia, and of certain phosphate salts from China. China has started its own investigation into imports of some U.S. cars.

Mr. Liu's comments suggest that currency could emerge as a thorny issue during Mr. Obama's visit.

China is particularly affected by the U.S. policy to keep interest rates at near-zero because it has kept its own currency, the yuan, largely pegged to the dollar. Key trading partners like the U.S. and European Union have urged China to let its currency appreciate, and multilateral agencies like the World Bank and International Monetary Fund have said a stronger yuan would help avoid risks of asset bubbles, in part because that would make it more expensive for outsiders to buy Chinese assets.

Some leaders of the Asia-Pacific Economic Cooperation summit in Singapore on Sunday pressed for language on currency to be in the forum's final communique. But disputes between the U.S. And Chinese delegations over emphasis forced all currency language to be dropped.

Before the president's departure on the Asia trip, Jeffrey Bader, the National Security Council's senior director for East Asian affairs, said that it is 'an integral part of U.S. policy that China move to a market-based approach to currency.'

White House officials say the administration has worked hard to ensure a smooth transition in relations with China. 'The relationship is off to a good start,' Mr. Bader said.

'China is an essential player on the global issues that are the center of our agenda, global economic recover, climate change, energy, North Korea, Iran,' Mr. Bader said.

He acknowledged a historic degree of mistrust between the two nations, which he said Mr. Obama will focus on in Shanghai and Beijing. Ben Rhodes, another NSC official, said Mr. Obama's emphasis on trade and an export-driven recovery for the United States will be especially strong in China.

The U.S. president has made a tonal shift on trade since his departure, emphasizing trade as a jobs issue for the moribund U.S. labor market. That is a striking rhetorical change from his campaign for president, when he questioned the economic value of trade agreements.

In the one major policy address of his trip, Mr. Obama treated China gingerly before a Japanese audience in Tokyo's Suntory Hall on Saturday. 'I know there are many who question how the United States perceives China's emergence, but as I have said, in an interconnected world, power does not need to be a zero-sum game, and nations need not fear the success of another,' he said.

There is concern that Mr. Obama's first swing through Asia as president will yield more disappointment than progress on trade, human rights, national security and environmental concerns. On Sunday, APEC leaders dropped efforts to reach a binding international climate-change agreement in Copenhagen next month, settling instead for what they called a political framework for future negotiations.

The election of Mr. Obama, a believer in strict limits on greenhouse-gas emissions, had raised hopes among environmentalists that Copenhagen would produce a tough, binding treaty to follow the Kyoto Accords of 1997, which expire in 2012.
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