Bush Calls Chinese President

President Bush (searchcalled Chinese President Hu Jintao (searchon Thursday, reviewing U.S. positions on a wide range of delicate issues with the leader who is amassing new power in China.

Bush placed the call 2 1/2 weeks after former President Jiang Zemin (searchhanded over his last post as military chief. That move consolidated China's top party and military posts under Hu's control, giving him and his premier, Wen Jiabao, a freer hand to act.

The changes also raised the stakes in Bush's relationship with Hu, about two years after Hu became Communist Party leader.

White House spokesman Scott McClellan did not mention the shifts in Chinese politics, remaining vague on what prompted the call. He said it was "part of our continuing, constructive, cooperative and candid dialogue with China on U.S.-China relations."

The two leaders talked about several big-ticket issues between their countries, including the North Korea nuclear problem; Hu said his country remained committed to the stalled talks between the two Koreas, the United States, Russia, China and Japan. Three rounds of talks have been held in Beijing, but yielded little progress. A fourth round was set for September, but North Korea has refused to attend.

According to McClellan, Hu also committed to "move forward firmly and steadily to a market-based, flexible exchange rate."

For months, U.S. officials have lobbied their Chinese counterparts to commit to no longer linking their currency, the yuan, closely to the value of the dollar. The effort is intended to address the bulging U.S. trade deficits and nearly 3 million lost American manufacturing jobs.

"Firmly and steadily" was precisely the phrase Chinese officials used last weekend as they promised to do so. But China refused in discussions with the United States and also in broader talks with other nations' officials to say when it might stop linking the yuan to the U.S. dollar.

Many private economists believe it could be years before China is willing to give up the trade benefits it enjoys from a tightly controlled exchange rate that makes its products as much as 40 percent cheaper than American-made goods. The U.S. trade deficit with China soared to a record $124 billion last year.

Bush also reiterated his support for the long-standing "one-China" policy, which opposes formal independence for Taiwan, as well as the Taiwan Relations Act, which permits arms sales to the island off the Chinese mainland. Bush urged the Chinese leader to "look for opportunities" for dialogue across the Taiwan Straits, McClellan said.