Summers, Donilon Get Unusual China Access as Yuan Debate Looms

China’s President Hu Jintao and Premier Wen Jiabao were among at least five ruling Politburo members who met with two key advisers to President Barack Obama this week, exchanges that Hu said had “gone well.”

The red-carpet treatment afforded White House National Economic Council Director Lawrence Summers and Deputy National Security Advisor Thomas Donilon comes a week before key congressional hearings on whether the yuan is undervalued.

“This is a high-powered group; both of them work in the West Wing,” said Paul Haenle, director of the Carnegie-Tsinghua Center for Global Policy in Beijing, who was the National Security Council’s China Director under Obama and President George W. Bush. “I think the Chinese recognized this was a very powerful delegation.”

Summers and Donilon discussed issues including Iran, North Korea and global economic rebalancing on their three-day trip, which ended today, White House National Security Council spokesman Mike Hammer said in a statement. The delegation also met Vice Premier Wang Qishan, General Xu Caihou and Communist Party Organization Department director Li Yuanchao, who also serve on the 25-person Politburo.

Tensions flared between the world’s No. 1 and No. 2 economies this year over territorial disputes in the South China Sea, U.S. arms sales to Taiwan and disagreements on how to deal with the regime of North Korean leader Kim Jong Il. The U.S. Congress hearings may lead to one or both houses passing legislation that might lead to higher duties on Chinese imports.

“The U.S. and China are going to have to figure out how to work on these issues together,” Haenle said. “They have no choice.”

White House Insiders

Haenle said it was unusual for a president to dispatch White House insiders such as Summers and Donilon on diplomatic missions and it was a reflection of the importance of the relationship. China’s decision to add a meeting with Hu to the agenda while the visit was in progress was a sign that the meetings may have been going well, Haenle said.

Hu and Obama have met six times during Obama’s presidency. Hu is planning a state visit to the U.S. in coming months.

“I’m sure that this visit will certainly enhance mutual communication and mutual trust, and play a positive role in furthering China-U.S. relations,” Hu told reporters today after meeting Summers and Donilon. “Since President Obama assumed office, China-U.S. relations have on the whole maintained healthy development thanks to the efforts of both sides.”

The U.S. delegation also met People’s Bank of China Governor Zhou Xiaochuan and Finance Minister Xie Xuren.

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--Michael Forsythe. Editors: Bill Austin, Patrick Harrington.

To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +86-10-6649-7580 or mforsythe@bloomberg.net

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