President calls on US to abandon zero-sum Cold War mentality, keep liquidity at reasonable, stable level

BEIJING - President Hu Jintao on Monday praised China-US relations, highlighted recent progress in ties and called for both sides to "abandon the zero-sum Cold War mentality" for a better future.

"We both stand to gain from a sound China-US relationship, and will lose from confrontation. We should view each other's development in an objective and sensible way," Hu said in a written interview with the Wall Street Journal and the Washington Post before kicking off his state visit to the United States on Tuesday.

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In the interview Hu spoke highly of progress in bilateral ties since US President Barack Obama took office in 2009, citing "close contact" between the two and practical cooperation in various areas.

But he pointed out that differences and sensitive issues remain.

Relations went through a rocky patch in 2010, due to political and economic disputes including a massive US arms sale to Taiwan, Obama's meeting with the Dalai Lama and the trade imbalance.

To improve ties, Hu suggested enhancing mutual trust, respecting each other's sovereignty, territorial integrity, development and expanding cooperation.

The Cold War mentality is not a major factor in China-US relations, "but some US politicians are using it to create obstacles", said Tao Wenzhao, an expert on US studies at the Chinese Academy of Social Sciences.

It reflects a lack of mutual trust and has resulted in US concerns about China, Tao said.

Hu reiterated that the Chinese government is committed to following the path of peaceful development.

Korean Peninsula

He also touched upon recent tensions on the Korean Peninsula, saying Beijing made relentless efforts to help ease the situation and there have been "signs of relaxation".

"We hope that the relevant parties will seize the opportunity to engage in active interactions, resume the process of dialogue and consultation as soon as possible and ensure that the situation on the peninsula will move forward in a positive direction," he said.

Hu said China hopes Pyongyang and Seoul could achieve reconciliation and eventually realize reunification peacefully and independently.

"We support their efforts in this regard. This is in the fundamental interests of both sides and conducive to peace and stability on the peninsula," he said.

On democracy, Hu said China is committed to the development of socialist democracy.

"Without democracy, there can be no socialist modernization," he said.

"We will continue to expand people's democracy and build a socialist country under the rule of law in keeping with China's national conditions."

In response to a question on whether the yuan's appreciation could curb domestic inflation, Hu said changes in the exchange rate are a result of multiple factors, including the balance of international payments and market supply and demand.

"In this sense, inflation can hardly be the main factor in determining the exchange rate policy," Hu said.

China, over the past year, has been pressed hard to revalue its currency amid accusations that the yuan's rate has hurt employment overseas. But Tao dismissed the view.

"There is no direct connection between the yuan's appreciation and another country's economic growth," Tao said.

Acknowledging rising domestic prices, Hu said they are "on the whole moderate" and "controllable". China is able to stabilize overall price levels.

In the meantime, the liquidity of the US dollar "should be kept at a reasonable and stable level", as US monetary policy will have a major impact on global liquidity and capital flows, Hu said.

The president also gave assurances that all registered foreign companies in China will enjoy the same treatment as local enterprises do.

With Hu set to arrive in Washington DC on Tuesday, more and more Americans expect the US to build a stronger relationship with China.

A survey by the Chicago Council on Global Affairs found that more than two-thirds of Americans prefer the US to cooperate and engage with China.

The survey, which polled more than 2,500 adults, revealed that three-quarters of the respondents believed that China's economy might eventually overtake the US economy. Only a minority of respondents saw China's rise as a "critical" threat.

"I view China as a nation that we need to work with a lot more in the future diplomatically, as well as on economic issues," said Elisa Rosoff, a 20-year-old undergraduate majoring in foreign relations at George Washington University.

"It's just exciting for someone of my age going through a power shift between nations of the world."

Yu Yang contributed to this story.