US Secretary of State Hillary Clinton wraps up visit to China

Tension has increased dramatically on the Korean peninsula in the past few days. An international investigation recently concluded North Korea had launched a torpedo to sink a South Korean warship in March. The attack killed 46 sailors.

The agreement of Pyongyang's ally China, which has not condemned the incident, to help ensure regional stability is seen to be crucial if international punitive action is to have a longlasting impact.

US Secretary of State Clinton wants China to support new sanctions against Pyongyang. She said early on in her trip to China that North Korea's provocative behavior was a matter of "urgent concern".

"We must work together to address this challenge and advance our shared objectives for peace and stability on the Korean Peninsula," Clinton said. So far, China has only called for restraint from all sides.

China supplies North Korea with most of its food and fuel.

Currency reform

The tension on the Korean peninsula overshadowed talks about currency reform. On Monday, US Treasury Secretary Timothy Geithner once again insisted that Beijing should let the yuan appreciate, saying that the exchange rate should "reflect market forces."

The US has long argued that the Chinese government keeps the yuan artificially weak, which gives Chinese exports an unfair advantage.

"We are asking that China give American firms the same opportunities to compete in China that Chinese firms enjoy in the United States. This is a simple principle of fairness," Geithner said.

President Hu rejected the pressure. "China will continue to steadily advance the reform of the formation mechanism of the exchange rate under the principles of independent decision-making, controllability and gradual progress," he said.

Re-establishing good ties

After a year in which relations between the world's largest economy and its biggest developing economy have been tense over currency reform, a Taiwan-US weapons deal and a meeting between US President Barack Obama and the Dalai Lama, the two-day talks in the Chinese capital were supposed to re-establish good ties.

Author: act/AFP/dpa/AP
Editor: Disha Uppal