CURRENCY AND DEBT
The United States complains that China keeps its currency artificially undervalued, unfairly helping exporters.
China has unofficially pegged the yuan to the dollar since mid-2008, meaning its currency has weakened against other trade partners as the value of the dollar has slid. Beijing is concerned the value of its dollar holdings could be eroded by massive debt issuances to fund the U.S. stimulus.
The U.S. Treasury Department said last month that China held $894.8 billion of Treasury securities at the end of December and was the largest single holder of U.S. government debt. [ID:nWAT014175]
U.S. lawmakers want to take action on the yuan, but U.S. law makes it difficult to investigate alleged subsidies.
Rash U.S. moves that threaten China's massive purchases of U.S. debt, and its funding of the U.S. deficit, are unlikely.
TRADE AND INVESTMENT
A World Trade Organisation panel is judging U.S. duties on Chinese tyres after the United States for the first time imposed safeguard duties agreed to when China joined the WTO.
Other trade disputes centre around steel products, poultry, Chinese tariffs on raw materials exports, and quality and safety concerns over Chinese-made food, toys and other goods that Chinese manufacturers view as a type of protectionism.
U.S. firms investing in China complain about intellectual property theft, murky regulations, corruption and unfair advantages enjoyed by domestic rivals.
China complains about investment barriers on the U.S. side, citing resource investments blocked on national security grounds.
In 2009, U.S. exports to China totaled $77.4 billion, but were dwarfed by $220.8 billion in exports from China to the United States, China's second biggest trade partner. Falling demand thanks to the financial crisis narrowed the trade gap.
In late February, Chinese Premier Wen Jiabao expressed hope that trade frictions would ease and said China was not deliberately seeking a trade surplus with the United States. [ID:nTOE61Q00Y]
TIBET AND TAIWAN
Exiled Tibetan spiritual leader the Dalai Lama makes frequent visits to the United States, and met President Barack Obama in the White House last month, drawing condemnation from Beijing, which says he is a separatist. [ID:nTOE61I02S]
China accused Obama of damaging ties by meeting the Dalai Lama and said it was up to Washington to repair relations.
China fears that ethnically distinct Tibetan areas will strive for independence, taking with them one-sixth of China's territory.
Taiwan also remains a sore point. China has threatened sanctions against companies making weapons or planes involved in the U.S. plan to sell $6.4 billion of arms to Taiwan, the self-ruled, democratic island off the mainland's coast.
Beijing has never renounced the use of force to enforce its claim on Taiwan, which it considers its sovereign territory. The United States says it is obliged by U.S. law to help the island defend itself.
China has yet to act on its sanctions threat, and last month allowed a U.S. aircraft carrier to visit Hong Kong. But Beijing has said it will curtail military exchanges with Washington to show its anger.
DIPLOMATIC AND MILITARY INFLUENCE
As China has grown to the world's third-largest economy, it is gaining greater clout, especially in Asia and Africa.
It is also upgrading its military and space capability, and Washington has said Beijing should be more open about its defence spending and strategic intentions.
China is wary of the United States' global military strength. U.S. patrols in waters China considers its exclusive zone led to minor incidents last year.
In 2001, a U.S. spy plane was forced to land in China after colliding with a Chinese fighter.
Yet China and the United States work together in talks to get North Korea to give up its nuclear weapons programme.
China worries that if its neighbour collapses refugees could destabilise northeast China. Washington wants China to put stronger pressure on North Korea, as well as Iran, over their nuclear activities.
INTERNET FREEDOMS
U.S. Internet firms have fared poorly in China, which censors content and blocks many foreign websites, including popular social media such as Twitter and Facebook, and YouTube.
In January, Google Inc (GOOG.O) said it might pull out of the country after a sophisticated cyber-attack from within China, adding that it would seek talks about offering a legal, uncensored search engine in China.
U.S. Secretary of State Hillary Clinton called on China to openly and thoroughly investigate the attacks.
China has rejected the claims, and last month its Foreign Ministry said Google's assertion that its computers were attacked by hackers based in China was "groundless".
By: Brant
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