By Simon Rabinovitch and Glenn Somerville

BEIJING/WASHINGTON, Nov 10 (Reuters) - President Barack Obama has promised to raise the issue of the yuan's exchange rate when he visits Beijing next week, putting the spotlight on a major bone of contention which has the potential to shake currency markets and diplomatic ties alike.

In an interview with Reuters in Washington, Obama put the question of the yuan in the broader context of a shared need to iron out imbalances in the world economy -- including China's huge savings -- in order to ensure sustainable global growth.

"They have a huge amount of U.S. dollars that they are holding, so our success is important to them. The flip side of that is that if we don't solve some of these problems, then I think both economically and politically it will put enormous strains on the relationship," he said. [ID:nN09278455]

Asked about Obama's comments, Foreign Ministry spokesman Qin Gang on Tuesday restated China's long-standing policy of maintaining the basic stability of the yuan at a reasonable and balanced level while gradually making the exchange rate more flexible. [ID:nPEK299504]

WHERE THINGS STAND NOW

China says it manages the yuan's exchange rate CNY=CFXS against a basket of currencies, but if there is a basket, the dollar is far and away the heaviest component.

The history of China's "managed float" regime divides neatly into two parts: July 2005 to July 2008, when the yuan gradually rose 21 percent in a crawling peg to the dollar; and July 2008 to the present, when the yuan has been virtually repegged at about 6.83 to the dollar.

U.S. critics complain that China is thwarting normal market adjustments that would push up the value of the currency to reflect China's rapid growth and thereby make its products more expensive for foreigners.