Obama in China grapples with economic strains

By Caren Bohan and Patricia Zengerle

BEIJING (Reuters) - U.S. President Barack Obama wrangles over trade and currency policy with his Chinese counterpart Hu Jintao Tuesday, with Iran and North Korea competing for attention at the summit of the two global powers.

The future of the Chinese yuan currency is expected to be on the agenda, following days testy exchanges over what Washington says is a serious undervaluing of the currency stoking global economic imbalances.

Hu has shown little patience for criticisms of Beijing's currency policy, and he and other Chinese officials have instead dwelt on what they have called the protectionist impulses and lax fiscal policies of the United States.

But even with a whole morning to talk, Obama and Hu will have a crowded agenda, underscoring the breadth and complexity of ties between their countries -- respectively the world's biggest and third biggest economies.

Both governments are key players in frustrated efforts to end North Korea's nuclear weapons program, and Obama is also looking for more support from China to press Iran over its nuclear activities.

Other topics to be talked about include human rights, as well as efforts to forge a new climate pact, following acknowledgement that a legally-binding agreement will not energy from negotiations in Copenhagen next month.

Both governments have tried to strike a friendly tone before what could otherwise be a combative summit.

In commercial hub Shanghai Monday, Obama told Chinese students he did not fear their nation's rise, as he began his first visit to China since taking office earlier in the year, but called for more balanced trade between the two sides.