The ideal metaphor for the new reality of U.S.-China relations: The U.S. Embassy has been straining, in vain, to get the Chinese government to change the official Chinese transliteration of Obama, from 奥巴马 to 欧巴马 -- basically, from Ao Ba Ma to Ou Ba Ma. As is often the case when China incorporates a foreign word into Chinese characters, the original Ao Ba Ma spelling popped up organically some years ago and stuck, even though it is not a correct translation. Now, as a great piece on Danwei.org explains, the U.S. is trying to persuade China to change it, but China has contemptuously refused. The moral: When you can't even get your counterpart in a negotiation to spell your name right, you are probably in for a rough ride.

Two Chinese rights activists said today that they were briefly detained by police after seeking a meeting with Obama in Beijing. They added that the US influence over fascist-ruled China on human rights had declined, as evidenced by the lack of coverage of Obama's visit within the country.

Jiang Tianyong and Fan Yafeng said they had gathered with others at a hotel near the US embassy on Wednesday, the day the American president left the country. But plain-clothed police officers arrived shortly after they rang the embassy and asked for a meeting. Most of the group left, but the two men stayed until they were taken away and questioned for two hours, Jiang said.

"We had wanted to discuss [with Obama] the deterioration of religious freedom in China, as well as deteriorating treatment of other rights defenders," said Fan, a legal scholar who recently lost his job at the Chinese Academy of Social Sciences. He is a Christian active in informal house churches.

"Now on the Chinese mainland and internationally, it's widely believed that Obama's visit to China was a big failure," Fan added, citing the fact that no questions were allowed at Obama's press appearance with Hu Jintao and that his meeting with students was broadcast on television only in Shanghai.

Jiang, who said he was also detained for more than 12 hours yesterday by officers who confronted him as he took his daughter to school, added: "Personally I'm very disappointed by his visit.

"I believe a meeting would have shown Americans were still supporting the rights of Chinese activist lawyers. It's very important to show that his administration is concerned about human rights."

Jiang was one of almost two dozen lawyers whose licences were not renewed this spring. He has defended other activists and said he was willing to act for Tibetans accused of protests and rioting last year.

The New York Times reported this week that American officials considered organising meetings with a number of people, including Chinese lawyers, adding: "Officials say time constraints, not political considerations, sidelined those options."

Another lawyer, Mo Shaoping, said he had been told by friends that Americans were interested in a meeting. He had been willing to take part but heard no more about it.

In China, Obama criticised internet censorship and stressed that the US regarded rights such as political participation as universal, but avoided referring to specific abuses in the country. Analysts disagree about whether it is more effective to press the issues openly or focus on discussions in private.

Jeff Bader, senior director of Asian affairs at the National Security Council, told reporters: "This was as direct a discussion on human rights as I've seen by any high-level visitor with the Chinese".

He said the president had made it clear to his hosts that such rights were a "fundamental, bedrock principle" of US foreign policy.

Separately, the US embassy in Beijing confirmed today that it is pressing China to release an American citizen held for two years on state secrets charges.

Xue Feng, a Chinese-born geologist, was detained after negotiating the sale of an oil industry database to his US-based employer.

Jerome Cohen, a legal expert advising Xue's family, said the case - like that of Stern Hu, the Australian Rio Tinto employee detained along with three Chinese colleagues in July - raised questions about the limits of China's secrets laws, and how they apply to commercial information.

It was an evening out that college students Leslie Pope and John Wagner will long remember.

Not only did they get what they called lousy service, they got handcuffed and arrested.

All over a $16.35 tip.

They were with a half-dozen friends at the Lehigh Pub in Bethlehem last month, so the establishment tacked what it called a mandatory 18 percent gratuity onto the bill of about $73, according to reports.

Pope and Wagner refused to pay.

"You can't give us terrible, terrible service and expect a tip," said Pope, a 22-year-old Moravian College senior who's a Pottsville native, according to the Lehigh Valley Express-Times.

They had to find their own napkins and cutlery while their waitress caught a smoke, had to ask the bar for soda refills, and had to wait over an hour for salad and wings, they told NBC10.

The pub, which was very busy that night, took the $73, but then called the cops, who treated the matter as a theft.

The menu clearly states, "18 percent gratuity added to check of parties of 6 of more," and a similar message is printed on receipts, a pub employee said this morning.

A court date is scheduled for next month.

MEANWHILE:

Cop Tases 10-Year-Old Girl

Arkansas mother suggested stun gun treatment for unruly daughter

NOVEMBER 18--An Arkansas cop tasered an unruly 10-year-old girl after her mother called police to report that the child was crying, screaming, and refusing to go to bed. The tased girl, Kiara Medlock, is about 65 pounds and 4' 6", according to her father. Anthony Medlock, a truck driver who does not live with the fifth grader and her mother, provided TSG with a recent photo of his daughter, which can be seen at right. According to the below Ozark Police Department report, when Officer Dustin Bradshaw arrived at the residence last Thursday, he found the girl "screaming, kicking, and resisting every time her mother tried to touch her." Bradshaw added that, "Her mother told me to tase her if I needed to." After Kiara continued to refuse her mother's instructions, the cop concluded that "there was not going to be a peaceful resolution of the issue." Bradshaw warned the girl that she was "going to jail," but the child continued kicking and crying and resisted his attempt to handcuff her. During the tussle, Kiara "struck me with her legs and feet in the groin, reported Bradshaw, who countered with a brief "stun to her back" with his Taser. The child, not surprisingly, "immediately stopped resisting and was placed into handcuffs. She would not walk on her own and I had to carry her to my police car." Kiara was then transported to a youth shelter.

State propaganda heralded President Barack Obama's maiden trip to China as a triumph, but ordinary Chinese were largely shielded by their government from his most critical remarks and activists were disappointed by the measured tone of those they did hear.

One blogger even pined for the tough line taken by former President George W. Bush.

"Like a star rushing from one show to another, Obama has come and gone, without stirring the slightest ripples," blogger Zhao Dezhu wrote in an online post.

Zhao, who writes a popular blog and twitters under the name Hecaitou, said the visit made him miss Bush who "couldn't speak with flowery language and even made grammatical mistakes but spoke as plainly as an American farmer."

Obama, by contrast, speaks "with sweet but empty words."

State media portrayed the two-and-a-half day trip as a slam-dunk for China-U.S. relations, saying a joint statement issued by Obama and China's President Hu Jintao was a breakthrough to inspire the world.

"The Sino-U.S. Joint Statement is as worthy as gold," trumpeted the state-run 21st Century Business Herald while the Beijing Post said it set "a good example for many other bilateral relations."

Among regular folk, there was no such sizzle.

Maybe it was the rain in Shanghai or the below freezing temperatures in Beijing, but crowds did not line the streets to catch a glimpse of the president's motorcade—a marked difference from the well-wishers who have clamored to see Obama in Europe.

Obama does have a following in China, particularly among youth who see him as an exciting contrast to China's staid leadership, but his visit seems to have had little affect on even those who like him—possibly because many of his comments were not widely disseminated.

Several young people interviewed Wednesday said they admired Obama, but none had seen his town hall-style meeting in Shanghai and they based their opinions on photos, state media coverage, or things they'd read about him before. They had little to say about his visit specifically.

"He has a big fan club among the young people of China, because many of us have seen the adversity he has gone through and we look up to him for inspiration," Li Yuanyuan, a 24-year-old office worker said during her lunch break in downtown Beijing.

Han Xuanke, 29, an employee of a technology firm in Beijing's business district said he was more interested in Obama than he had been in Bush or former President Bill Clinton.

"He represents energy and something new and exciting that Chinese politicians don't have," Han said.

The town hall was intended to let the president mix with people like Han and Li, but Beijing ensured it was a tightly scripted affair that few people were able to see because it was only broadcast on one regional television channel.

Obama's strongest comments during the town hall were directed at China's Internet controls.

"I'm a big supporter of non-censorship," Obama said. "I recognize that different countries have different traditions. I can tell you that in the United States, the fact that we have free Internet—or unrestricted Internet access—is a source of strength, and I think should be encouraged."

The critical remarks were played down in the Chinese media and scrubbed from some Chinese Web sites.

The event was streamed live on the White House Web site, but the connection was choppy and delayed. The State Department said later more than 7,000 Chinese Internet users watched the event—a tiny fraction of the more than 300 million Chinese who are online.

Chinese bloggers who saw it were grateful that he addressed censorship, but many zeroed in on what they considered Obama's waffling language.

"Learn English from Obama: Instead of saying 'I want to eat,' say 'I am a big supporter of non-hunger,'" Wang Pei, a writer based in eastern China's Hangzhou, twittered on Tuesday.

Many were watching the town hall closely for how Obama would handle China's poor human rights record, especially after Secretary of State Hillary Clinton said in February that the United States would not let such concerns interfere with cooperation with Beijing on global crises.

Obama spoke broadly about basic freedoms but steered clear of the buzz phrase "human rights." The next day, he more pointedly raised the issue during a media appearance with President Hu, even touching on rights for minorities—a particular sore spot in China, where Tibetans and Muslim Uighurs seek more autonomy.

"We do not believe these principles are unique to America, but rather they are universal rights and that they should be available to all peoples, to all ethnic and religious minorities," Obama said.

Xue Chen, a research fellow of Strategic Studies at the Shanghai Institutes for International Studies, said Obama's measured tone on such sensitive topics was a positive development that showed a rethinking of U.S. foreign policy since Bush.

"They are now more willing to take the role of a listener. And only in this way can the U.S. interests be better met," he said.

For many mainland activists, however, the approach fell short.

Yang Zili, a Chinese dissident recently freed after eight years in prison for forming a political study group, had been expecting something stronger from Obama.

"Although Obama mentioned some words such as 'rights' and 'freedom' in the speech in Shanghai, we expect he can do more to promote the improvement of China's human rights condition," he said.

Zhang Jian, a 30-year-old office worker from north China's Inner Mongolia region said many Chinese were taking a wait-and-see approach to the new leader.

"It's a trip Obama needs to make. ... But I don't think we're necessarily going to immediately warm up to the U.S. as a result of one trip," said Zhang who was visiting Beijing on business. "It will be a relationship built over mutual trust and understanding over time."

Absolutely evil: Here in China, chefs have figured out a way to keep a fish alive as it gets deep fried and then waits to be eaten. Below is the shocking video of a deep-fried fish that's still living and moving on a plate.

Liu Li Xin and his group Ordinance depict a new mood of nationalism

While US President Barack Obama has been sitting down with China's leaders seeking ever closer co-operation, some observers are concerned as to how China will behave as it gets stronger.

Beijing is building up its military forces, while some fear that popular nationalism is a growing and worrying force.

In the dark, cavernous space of a rock club in Beijing's university district, Liu Li Xin is warming up. Crashing chords resonate from his electric guitar.

It is the sound of China's stirring underground. Li Xin and his group Ordinance are at the radical edge of Chinese music. Their latest album, Rock City, has been banned from the airwaves.

The lyrics criticise the government, they tell of democracy, corruption. They say: "Taiwan is ours, Tibet is ours. Compromising with the United States and Japan is a disgrace".

"Our lyrics are aimed at our government," says Li Xin.

"It takes a very tough line towards its own people. But outside China it is very soft. When your people are being bullied by others, you should stand up for them. Right now they are being very soft."

Li Xin articulates a new nationalism that is a growing and increasingly powerful force in China.

It is almost always hostile to the US and Japan, apt to believe that other nations are bent on thwarting China's rise.

Government 'afraid'

China's nationalists are often critical of their own government too, saying it is weak, not doing enough to stand up for China's interests.

A powerful country like China of course needs a powerful army, an army that can conquer anybody in any part of the world Wang Xiaodong

"Right now the government brainwashes people into thinking that the country is strong," Li Xin says.

"The authorities have banned our songs but we are not afraid at all. I think it is the government who are afraid, and that is why they banned us."

Beijing's biggest bookshop is a vast place with thousands of titles on sale. For part of this year one book was riding high in the best-seller lists.

It's called Unhappy China and is a collection of pieces by a group of nationalist writers about the vision they have for China.

They say it has sold 800,000 copies since it was published earlier this year. The day we went to the bookshop, there was just one copy left.

One of the men who contributed, Wang Xiaodong, lives in a grey, nondescript apartment block in a Beijing suburb. He is one of the men giving a voice to the growing current of nationalism in China.

I ask him what he means when he writes in Unhappy China: "If you don't respect us we will beat you up."

"If there is a powerful country, and if you don't try to please that country, you will be in trouble," says Wang Xiaodong. "That's exactly the way the United States behaves."

When I ask if he believes China should have a powerful military and be prepared to go to war he replies: "Definitely. A powerful country like China of course needs a powerful army, an army that can conquer anybody in any part of the world. This should be our grand vision."

In recent years China has embarked on a rapid military build-up, acquiring the ability to project its power far beyond its borders.

One day it may even be in a position to challenge the US as the dominant power in Asia.

China's leaders says their nation's rise will be a peaceful one. But US Deputy Secretary of State James Steinberg recently called on China to reassure other nations about its intentions.

"Just as we and our allies must make clear that we are prepared to welcome China's arrival as a prosperous and successful power, China must reassure the rest of the world that its development and growing global role will not come at the expense of the security and well-being of others," Mr Steinberg said.

'Dangerous scenario'

One of his predecessors, Susan Shirk, Deputy Assistant Secretary of State for East Asian affairs under President Bill Clinton, goes further.

Li Nan was stopped from holding a nationalist protest

She says the combination of China's growing military and growing popular nationalism presents dangers.

"It creates the risk, not a high probability, but a risk, that one day China's leaders could feel that to look strong in the eyes of their public they have to make a threat to Japan or to Taiwan and that they will feel that they cannot back down from that threat without jeopardising their own domestic support or even their own survival in power. So I think that is a very dangerous scenario," she says.

Perhaps aware of the dangers of unchecked nationalism, China is trying to control some on the more radical fringe.

Three years ago there was a confrontation on some disputed islands in the East China Sea.

Chinese nationalists had sailed there to try to evict Japanese soldiers from the islands.

In the Chinese boat was Li Nan. He says his anti-Japan alliance has had more than 70,000 supporters registered on its website. But when he tried to stage another protest this year the Chinese authorities stopped him.

"I am not just targeting Japan but all those who threaten the interests of the Chinese people," says Li Nan. "Maybe even the United States and some others, I would see them all as enemies."

And Li Nan offers a view of how a future crisis, such as one over energy supplies, might spur on nationalist sentiment in China.

"In the future, energy supplies will become more and more scarce. Today each American consumes 10 times as much energy as each Chinese person. So every nation will have to think about their own survival. At that time, nationalism will be the mainstream."

It is a vision that will give some in America pause for thought.

The US National Intelligence Strategy this year described China as presenting a complex global challenge.

A China with a strong nationalist current and a powerful military could be seen as an even more troubling prospect for Washington.

After you have read these, ask yourself: what wouldn't Sarah Palin lie about if she felt she had to?

Palin lied when she said the dismissal of her public safety commissioner, Walt Monegan, had nothing to do with his refusal to fire state trooper Mike Wooten; in fact, the Branchflower Report concluded that she repeatedly abused her power when dealing with both men.

Palin lied when she repeatedly claimed to have said, "Thanks, but no thanks" to the Bridge to Nowhere; in fact, she openly campaigned for the federal project when running for governor.

Palin lied when she denied that Wasilla's police chief and librarian had been fired; in fact, both were given letters of termination the previous day.

Palin lied when she wrote in the NYT that a comprehensive review by Alaska wildlife officials showed that polar bears were not endangered; in fact, email correspondence between those scientists showed the opposite.

Palin lied when she claimed in her convention speech that an oil gas pipeline "began" under her guidance; in fact, the pipeline was years from breaking ground, if at all.

Palin lied when she told Charlie Gibson that she does not pass judgment on gay people; in fact, she opposes all rights between gay spouses and belongs to a church that promotes conversion therapy.

Palin lied when she denied having said that humans do not contribute to climate change; in fact, she had previously proclaimed that human activity was not to blame.

Palin lied when she claimed that Alaska produces 20 percent of the country's domestic energy supply; in fact, the actual figures, based on any interpretation of her words, are much, much lower.

Palin lied when she told voters she improvised her convention speech when her teleprompter stopped working properly; in fact, all reports showed that the machine had functioned perfectly and that her speech had closely followed the script.

Palin lied when she recalled asking her daughters to vote on whether she should accept the VP offer; in fact, her story contradicts details given by her husband, the McCain campaign, and even Palin herself. (She later added another version.)

Palin lied when she claimed to have taken a voluntary pay cut as mayor; in fact, as councilmember she had voted against a raise for the mayor, but subsequent raises had taken effect by the time she was mayor.

Palin lied when she insisted that Wooten's divorce proceedings had caused his confidential records to become public; in fact, court officials confirmed they released no such records.

Palin lied when she suggested to Katie Couric that she was involved in trade missions with Russia; in fact, she has never even met with Russian officials.

Palin lied when she told Shimon Peres that the only flag in her office was the Israeli flag; in fact, she has several flags.

Palin lied when she claimed to have tried to divest government funds from Sudan; in fact, her administration openly opposed a bill that would have done just that.

Palin lied when she repeatedly claimed that troop levels in Iraq were back to pre-surge levels; in fact, even she acknowledged her "misstatements," though she refused to retract or apologize.

Palin lied when she insisted that the Branchflower Report "showed there was no unlawful or unethical activity on my part"; in fact, that report prominently stated, "Palin abused her power by violating Alaska Statute 39.52.110(a) of the Alaska Executive Branch Ethics Act."

Palin lied when she claimed to have voiced concerns over Wooten fearing he would harm her family; in fact, she actually decreased her security detail during that period.

Palin lied when asked about the $150,000 worth of clothes provided by the RNC; in fact, solid reporting contradicted several parts of her statement.

Palin lied when she suggested that she had offered the media proof of her pregnancy with Trig to "correct the record"; in fact, no reports of her medical records were ever published; and the letter from her doctor testifying to her good health only emerged hours before polling ended on election day, even though there was nothing in it that couldn't have been released two months earlier.

Palin lied when she said that "reported" allegations of her banning Harry Potter as mayor was easily refutable because it had not even been written yet; in fact, the first book in that series was published in 1998 - two years into her first term - and such rumors were never reported by the media, only circulated as emails.

Palin lied when she denied having participated in a clothes audit with campaign laywers; in fact, the Washington Times later confirmed those details.

Palin lied when asked about Couric's question regarding her reading habits; in fact, Couric's words were not, "What do you read up there in Alaska?" or anything close to condescension.

Palin lied when she mischaracterized the "$1200 check" given to Alaskans as the permanent fund dividend check; in fact, that fund had yielded $2,069 per person, and she claimed otherwise to obscure the fact that Alaskans also received a $1200 rebate check from a windfall profits tax on oil companies - a tax widely criticized by Republicans.

Palin lied when she claimed to be unaware of a turkey being slaughtered behind her during a filmed interview; in fact, the cameraman said she had picked the spot herself, while the slaughter was underway.

Palin lied when she denied having rejected federal stimulus money; in fact, she continued to accept and reject the funds several times.

Palin lied when she claimed that legislative leaders had canceled a meeting with her to hold their own press conference; in fact, they only canceled it after being told she would not participate, and the purpose of the press conference was very different from the meeting's.

Palin lied when she announced on the news that she never holds closed-door meetings; in fact, she had just attended a closed-door meeting with the legislature earlier that day.

Palin lied when she said that former aide John Bitney's "amicable" departure was for "personal" reasons; in fact, Bitney said he was fired because of his relationship with the wife of Palin's friend, plus a Palin spokesperson later claimed "poor job performance" for his firing - without elaborating.

Palin lied when she said she kept her running injury a secret on the campaign trail; in fact, her bandaged hand was clearly visible in photographs and the story was widely talked about.

Palin lied when she claimed that Alaska has spent "millions of dollars" on litigation related to her ethics complaints; in fact, that figure is much, much lower, and she had initiated the most expensive inquiry.

Palin lied when she denied that the Alaska Independence Party supports secession and denied that her husband had been a member; in fact, even the McCain campaign noted that the party's very existence is based on secession and that Todd was a member for seven years.

SUSPECTED cannibals killed a young man, ATE part of him and then sold other bits to a KEBAB house.

Cops also believe the 25-year-old victim's body parts may have been used to fill PIES too.

The trio of homeless men were arrested in Russia - accused of murdering the man with knives and a hammer.

Prosecutors revealed: "After carrying out the crime, the corpse was divided up - part of it was eaten and part of it was sold to a kiosk selling kebabs and pies."

Suspicions were raised when dismembered parts of a human body were found near a bus stop in the outskirts of the Russian city of Perm - which is 720 miles east of Moscow.

Chopped up

The three men all have criminal records, said Russian cops.

They have been arrested on suspicion of killing their victim - who has not been named - before chopping up his corpse to eat.

Detectives for the Prem region released the astonishing statement that the human remains could have been used for kebabs and pies on their www.susk.perm.ru website.

But police said it was not clear yet if any of the human meat had been sold to customers.

A CNN correspondent said Monday she was detained byChinese security guards in Shanghai for two hours for displaying a T-shirt on camera depicting US President Barack Obama as Mao Zedong.

Emily Chang, a Beijing-based correspondent for the US television network, said in a blog post on CNN.com that she hunted down the shirt after hearing they had been banned amid fears they "may offend the American president."

The shirt shows Obama, who is making his first visit to China as president, in a Red Army uniform staring into the distance in a pose made famous by the former Chinese leader.

The front of the shirt says "Serve the People" in Chinese, Chang said. "Oba-Mao" is written on the back in English.

Chang said she held the shirt up to the camera while filming a story in a Shanghai market.

"Two security guards happened to pass by at the moment I announced to the camera: 'This is the T-shirt everybody is talking about,'" she said.

"And that was it. They scrambled towards us and tried to pry the shirt out of my hands," Chang said. "I didn't give in.

"There was a bit of yelling and quite a scuffle," she said, adding that CNN "had everything on tape."

"We ended up being detained for two hours in the cold, maze of a market," she said. "A crowd gathered round. More security and then police showed up.

"They wanted our press cards, our passports, but most of all, they wanted the shirt," she said. "Finally, they let us go. Phew!"

Chang refused to surrender the offending shirt and joked that a number of jealous White House and CNN colleagues had tried to "bribe" her for it.

by Sophie Richardson
Speaking in Tokyo’s Suntory Hall on Saturday on the first leg of his visit to Asia, President Barack Obama stressed the importance of promoting human rights in the region. “Supporting human rights,” he said, “provides lasting security that cannot be purchased in any other way." “There are certain aspirations that human beings hold in common: The freedom to speak your mind, and choose your leaders; the ability to access information, and worship how you please; confidence in rule of law, and the equal administration of justice. These are not impediments to stability, they are its cornerstones.”

Human rights have deteriorated markedly in China since President Obama took office, particularly for the country’s vibrant but beleaguered civil society—journalists, lawyers, health, human rights and religious advocates. To help reverse this trend, President Obama should take up with President Hu Jintao each of the five human-rights areas he spotlighted in Suntory Hall.

On “the freedom to speak your mind, and choose your leaders,” President Obama should ask President Hu to release Chinese activists who have been jailed or detained for exercising this basic right. Liu Xiaobo, for example, was arrested last December for coauthoring Charter 08, a pro-democracy and human-rights manifesto. In June, he was formally charged with “incitement to subvert state power,” a charge often used to silence critics of the Chinese government.

On the “ability to access information,” President Obama should raise the case of Tan Zuoren and Huang Qi, two activists also facing charges of subversion. Their crime? Investigating the deaths of schoolchildren in the May 2008 Sichuan earthquake and posting their findings online. China’s “Great Firewall” prevents the country’s 338 million Internet users from freely accessing information on the Web, while the censorship of the press, television, and radio is equally pervasive.

On the “ability to worship how you please,” President Obama should ask President Hu to ensure the respect of China’s own constitution, which guarantees freedom of religion. In spite of this provision, Buddhist followers of the Dalai Lama in Tibet, Uighur Muslims in the Xinjiang Autonomous Region, and Christians in underground “house churches” face numerous restrictions to their freedom of faith.

On the “confidence in the rule of law,” President Obama should urge the Chinese government to abolish the practice of renewing lawyers' licenses annually—a way to disbar courageous rights-defending lawyers who bring cases that expose government abuses. He should also address the state secrets law which so often is used against peaceful critics of the government. On the “equal administration of justice,” President Obama should denounce recent executions and the complete lack of due process in the trials of Tibetans and Uighurs arrested after protests in March 2008 and July 2009.

Finally, as the Chinese government welcomes President Obama on his first official visit, thousands of Chinese suffer in secret, unlawful detention facilities known as “black jails,” the existence of which the Chinese government unconvincingly denies.

Human Rights Watch has interviewed dozens of people who were grabbed off the streets and detained in these prisons, used primarily by provincial and municipal officials as a means of stopping their citizens from complaining to national officials about abuses like illegal land grabs and corruption. Detainees—men, women and teenagers—are often physically and psychologically abused. Many are denied food and sleep, and fall victim to theft, extortion or sexual abuse by guards.

Said one 43-year-old man of his 55-day detainment: "I was beaten [by guards] every three days... they said I didn't respect their work. I couldn't endure it and several times considered suicide."

President Obama should call for the dismantlement of these illegal detention facilities, and ask China’s leaders to make rule of law reforms a top priority.

Even as he meets with senior government officials in China, President Obama should remember to advocate for human rights of the people of China. By making these requests, he can show that he is willing to walk the walk—not just talk the talk—on human rights.

Dr. Sophie Richardson is the Asia advocacy director at Human Rights Watch.

Obama Talks Human Rights, Censorship With Chinese Students But Event Is Not Broadcast Nationally

At the Museum of Science and Technology Monday afternoon, Obama took questions from a docile audience of more than 400 Chinese university students handpicked by officials of eight different Chinese universities.

The town hall meeting was one of the few unscripted moments. It was supposed to be carried live on Chinese state television but at the last moment, the Chinese government changed its mind and only local stations in Shanghai, and the White House Web site, carried it live.

The president opened with a short speech, saying that America and China's rocky past shouldn't influence the future.

But he did not shy away from those disagreements -- including the issue of human rights, a subject that has weighed on the U.S.-China relationship in recent years.

"These freedoms of expression and worship and access to information and political participation, we believe are universal rights," he said. ""They should be available to all people, including ethnic and religious minorities -- whether they are in the United States, China, or any nation. Indeed, it is that respect for universal rights that guides America's openness to other countries; our respect for different cultures; our commitment to international law; and our faith in the future."

The questions were wide-ranging but fairly unchallenging. The students asked the president about his views on the arms sales to Taiwan, his Afghanistan strategy review, and what he hopes to take back with him from this trip to China.

The Obama administration says it solicited questions from the U.S. Embassy Web site so as to ensure some "authentic" queries will be made as well.

The White House said it wanted this forum to be just like those that the president holds in the United States -- no pre-screened questions, a free-flowing dialogue.

So it was fitting when the president was asked about China's Internet censorship policies and whether Chinese should be able to access banned sites like Twitter. Communist censors prevent Chinese citizens from accessing many sites, including social networks such as Facebook and Twitter, as well as news sites.

'The More Freely Information Flows, the Stronger the Society Becomes'

The Internet question came via the U.S. Embassy Web site and read by U.S. Ambassador to China Jon Huntsman.

"In a country with 350 million Internet users and 60 million bloggers, do you know of the firewall?" Huntsman asked. "And second, 'Should we be able to use Twitter freely?'"

Obama first noted that he personally does not use Twitter -- "My thumbs are too clumsy to type in things on the phone" -- but said he is a "big believer in openness when it comes to the flow of information."

"I think that the more freely information flows, the stronger the society becomes," he said. "Because then citizens of countries around the world can hold their own governments accountable. They can begin to think for themselves. That generates new ideas, it encourages creativity and so I've always been a strong supporter of open Internet use."

Obama called unrestricted Internet access, as in the United States, "a source of strength" and something to be encouraged.

Seemingly making an attempt at humor that didn't necessarily translate well into Mandarin, Obama said that "I should be honest, as president of the United States, there are times where I wish information didn't flow so freely because then I wouldn't have to listen to people criticizing me all the time."

He then turned to a more serious point, saying, "I think people naturally,...when they're in positions of power sometimes think, 'Oh, how could that person say that about me,' or 'That's irresponsible.'... But the truth is that because in the United States information is free, and I have a lot of critics in the United States who can say all kinds of things about me, I actually think that that makes our democracy stronger and it makes me a better leader because it forces me to hear opinions that I don't want to hear. It forces me to examine what I'm doing on a day-to-day basis to see, am I really doing the very best that I could be doing for the people of the United States."

The president was asked twice to explain why he won the Noble Peace Prize, which he said he received with "great humility." Obama told the students he believes the award was not about him personally, but the change he believes he represents.

White House officials were clearly disappointed that the president's town hall did not air live on Chinese state television.

One aide said the fact that it did not puts even more of a point on the president's statements on freedom of expression and human rights.

(Vetted) Question Time: Obama's Chinese Town Hall

It was a town hall, but this time Barack Obama was not in Iowa or New Hampshire. There were no hay bales, no bunting and no activists with questions about universal health care, clean coal or legalizing marijuana. This forum, after all, was being held in a nation controlled by the Communist Party.

Instead of being greeted by voters mulling their options, Obama on Monday met with several hundred well-dressed, attentive and relentlessly on-message students, handpicked by Chinese authorities for the occasion. They listened attentively, nodding in agreement at some of his answers and laughing at his jokes. Most of their questions were something less than challenging. "What measures will you take to deepen this close relationship between cities of the United States and China?" asked the first questioner, a young woman whom Obama picked randomly from the crowd. "What's the main reason that you were honored with the Nobel Prize for Peace?" asked another. A third followed up on the Nobel Prize line of inquiry. "What's your university/college education that brings you to get such kind of prizes?"

It was the first time a U.S. President had ever hosted a town hall in the Communist Party–controlled state, and the terms of the event were carefully negotiated between diplomats from both countries. The selection of the audience aside, Chinese authorities also picked three questions that had been submitted over the Internet — including one that was sharply critical of U.S. support for the Taiwanese military. U.S. ambassador Jon Huntsman read an additional question, which the White House said had been randomly selected from a group of online submissions acquired by the U.S. government.

Huntsman's question, the most controversial of the night, asked about the "great firewall" that prevents open access to the Internet in China, where many websites are blocked by government censors. "I'm a big supporter of noncensorship," Obama said in a section of the event that was described on the website of Xinhua, the state-run news agency. "This is part of the tradition of the United States."

But the Obama Administration's initial hopes for widespread Chinese broadcast of the event were not, in the end, realized. Though the event was covered on Shanghai television, elsewhere in the country the broadcast networks did not carry the feed. The White House website streamed the video, but it was not immediately apparent that any of the major Chinese Web portals had done the same. A TIME reporter tried to find Chinese residents watching the event in Beijing Internet cafés, but a survey of a half-dozen establishments found no one watching. Customers were playing online games instead.

The frustrations over distribution aside, Obama's message of the importance of communication and mutual respect did seem to strike a chord with the audience at the event. Obama received multiple rounds of applause, and when he spoke of the importance of education for women, many of the young ladies in the audience could be seen nodding their heads in approval.

In an address before taking questions, Obama mentioned the long struggle in the U.S. for equal rights among its citizens, invoking Martin Luther King and Thomas Jefferson to suggest parallels for increased individual rights in China. "We do not seek to impose any system of government on any other nation, but we also don't believe that the principles that we stand for are unique to our nation," Obama said. "These freedoms of expression and worship — of access to information and political participation — we believe are universal rights."

When Niall Ferguson writes, it must be read immediately:

A FEW years ago we came up with the term “Chimerica” to describe the combination of the Chinese and American economies, which together had become the key driver of the global economy. With a combined 13 percent of the world’s land surface and around a quarter of its population, Chimerica nevertheless accounted for a third of global economic output and two-fifths of worldwide growth from 1998 to 2007.

We called it Chimerica for a reason: we believed this relationship was a chimera — a monstrous hybrid like the part-lion, part-goat, part-snake of legend. Now we may be witnessing the death throes of the monster. The question President Obama must consider as he flies to Asia this week is whether to slay it or to try to keep it alive.

In its heyday, Chimerica consisted largely of the combination of Chinese development, led by exports, and American overconsumption. Thanks to the Chimerican symbiosis, China was able to quadruple its gross domestic product from 2000 to 2008, raise exports by a factor of five, import Western technology and create tens of millions of manufacturing jobs for the rural poor.

For America, Chimerica meant being able to consume more and save less even while maintaining low interest rates and a stable rate of investment. Overconsumption meant that from 2000 to 2008 the United States consistently outspent its national income. Goods imported from China accounted for about a third of that overconsumption.

For a time, Chimerica seemed not a monster but a marriage made in heaven. Global trade boomed and nearly all asset prices surged. Yet, like many another marriage between a saver and a spender, Chimerica was not destined to last. The financial crisis since 2007 has put the marriage on the rocks. Correcting the economic imbalance between the United States and China — the dissolution of Chimerica — is now indispensable if equilibrium is to be restored to the world economy.

China’s economic ascent was a result of a strategy of export-led growth that followed the examples of West Germany and Japan after World War II. However, there was a key difference: China made a sustained effort to control the value of its currency, the renminbi, which resulted in a huge accumulation of reserve dollars.

As Chinese exports soared, the authorities in Beijing consistently bought dollars to avoid appreciation of their currency, pegging it at around 8.28 renminbi to the dollar from the mid-1980s to the mid-’90s. They then allowed a modest 17 percent appreciation in the three years after July 2005, only to restore the dollar peg at 6.83 when the global financial crisis intensified last year.

Intervening in the currency market served two goals for China: by keeping the renminbi from rising against the dollar, it promoted the competitiveness of Chinese exports; second, it allowed China to build up foreign currency reserves (primarily in dollars) as a cushion against the risks associated with growing financial integration, painfully illustrated by the experience of other countries in the Asian crisis of the late 1990s. The result was that by 2000 China had currency reserves of $165 billion; they now stand at $2.3 trillion, of which at least 70 percent are dollar-denominated.

This intervention caused a growing distortion in the global cost of capital, significantly reducing long-term interest rates and helping to inflate the real estate bubble in the United States, with ultimately disastrous consequences. In essence, Chimerica constituted a credit line from the People’s Republic to the United States that allowed Americans to save nothing and bet the house on ... well, the house.

Nothing like this happened in the 1950s and 1960s. At the height of postwar growth in the 1960s, West Germany and Japan increased their dollar reserves roughly in line with the American gross domestic product, keeping the ratio stable at about 1 percent before letting it move slightly higher in the early 1970s. By contrast, China’s reserves soared from the equivalent of 1 percent of America’s gross domestic product in 2000 to 5 percent in 2005 and 10 percent in 2008. By the end of this year, that figure is expected to rise to 12 percent.

The Chimerican era is drawing to a close. Given the bursting of the debt and housing bubbles, Americans will have to kick their addiction to cheap money and easy credit. The Chinese authorities understand that heavily indebted American consumers cannot be relied on to return as buyers of Chinese goods on the scale of the period up to 2007. And they dislike their exposure to the American currency in the form of dollar-denominated reserve assets of close to $2 trillion. The Chinese authorities are “long” the dollar like no foreign power in history, and that makes them very nervous.

Yet there is a strong temptation for both halves of Chimerica to keep this lopsided partnership going. Despite much talk of the need to reduce global imbalances, the biggest imbalance of all persists. This year, America’s trade deficit with China will be around $200 billion, the same as last year. And China has again intervened in the currency markets, buying $300 billion to keep its currency and hence its exports cheap.

United States policy makers, meanwhile, seem equally willing to prolong America’s addiction to cheap money as long as economic recovery seems so fragile, regardless of the effect on the dollar’s exchange rate with other currencies. (When American officials insist that they favor a “strong dollar,” it’s usually a sure sign that they want the opposite.) And why would Americans want to discourage the Chinese from buying yet more dollar-denominated securities? With trillion-dollar deficits as far as the eye can see, the Treasury needs all the foreign buyers it can get.

The reality, however, is that an end to Chimerica is in the American interest for at least three reasons. First, adjusting the exchange rates between the currencies would help reorient the American economy — primarily by making American exports more competitive in China, the world’s fastest-growing economy.

Second, an end to Chimerica would lessen the potentially dangerous reliance of American economic policy on measures to stimulate domestic purchasing. American fiscal policy is clearly on an unsustainable path, and the Federal Reserve’s negligible interest rates and the printing of dollars are artificially inflating equity prices.

Finally, renminbi revaluation would reduce the risk of potentially serious international friction over trade. The problem is that as the dollar weakens against other world currencies — notably the euro and the Japanese yen — so does the renminbi, magnifying China’s already large advantage in global export markets. The burden of post-crisis adjustment falls disproportionately outside Chimerica. Unless China’s currency is revalued, we can expect an uncoordinated wave of defensive moves by countries on the wrong side of Chimerica’s double depreciation. Already we are seeing the danger signs. Last month Brazil imposed a tax on “hot money” — large, volatile flows of foreign investment that may exit an economy as quickly as they appeared — to try to slow the appreciation of its currency, the real. A number of Asian economies last week intervened to weaken their own currencies relative to the dollar. Similar currency games were a feature of the worst economic decade of the 20th century, the 1930s.

Historically, as production costs and income levels in countries have risen, their currencies have adjusted against the dollar accordingly. From 1960 to 1978, for example, the deutsche mark appreciated cumulatively by almost 60 percent against the dollar, while the Japanese yen appreciated by almost 50 percent. The lesson is that exporters can live with substantial exchange rate revaluations so long as they are achieving major gains in productivity, as China still is.

To be sure, China’s central bank has suggested that it might be willing to switch from the dollar peg to some form of exchange-rate management, taking account of “international capital flows and movements in major currencies.” But, like the recent Chinese comments about replacing the dollar as the premier international reserve currency, this may be no more than rhetoric.

During his visit to China this week, President Obama must resist the temptation to respond to these overtures with rhetoric of his own. This is not the time for big speeches, but for subtle diplomacy. Right now, Chimerica clearly serves China better than America. Call it the 10:10 deal: the Chinese get 10 percent growth; America gets 10 percent unemployment. The deal is even worse for the rest of the world — and that includes some of America’s biggest export markets and most loyal allies. The question is: What can the United States offer to make the Chinese abandon the dollar peg that has served them so well?

The authorities in Beijing must be made to see that any book losses on its reserve assets resulting from changes in the exchange rate will be a modest price to pay for the advantages they reaped from the Chimerica model: the transformation from third-world poverty to superpower status in less than 15 years. In any case, these losses would be more than compensated for by the increase in the dollar value of China’s huge stock of renminbi assets.

It is also in China’s interest to kick its currency-intervention habit. A heavily undervalued renminbi is the key financial distortion in the world economy today. If it persists for much longer, China risks losing the very foundation of its economic success: an open global trading regime.

And this is exactly what President Obama can offer in return for a substantial currency revaluation of, say, 20 percent to 30 percent over the next 12 months: a clear commitment to globalization and free trade, and an end to the nascent Chinese-American tariff war.

For as long as the People’s Republic has existed, the United States has been the principal upholder of a world economic order based on the free movement of goods and, more recently, capital. It has also picked up the tab for policing the oil-rich but unstable Middle East. No country has benefited more from these arrangements than China, and it should now pay for them through a stronger Chinese currency. Chimerica was always a chimera — an economic monster. Revaluing the renminbi will give this monster the peaceful death it deserves.

As a mixed-race girl growing up in this most cosmopolitan of mainland Chinese cities, 20-year-old Lou Jing said she never experienced much discrimination -- curiosity and questions, but never hostility.

So nothing prepared Lou, whose father is a black American, for the furore that erupted in late August when she beat out thousands of other young women on "Go! Oriental Angel," a televised talent show. Angry Internet posters called her a "black chimpanzee" and worse. One called for all blacks in China to be deported.

As the country gets ready to welcome the first African American U.S. president, whose first official visit here starts Sunday, the Chinese are confronting their attitudes toward race, including some deeply held prejudices about black people. Many appeared stunned that Americans had elected a black man, and President Obama's visit has underscored Chinese ambivalence about the growing numbers of blacks living here.

"It's sad," Lou said, her eyes welling up as she recalled her experience. "If I had a face that was half-Chinese and half-white, I wouldn't have gotten that criticism. . . . Before the contest, I didn't realize these kinds of attitudes existed."

As China has expanded its economic ties with Africa -- trade between them reached $107 billion last year -- the number of Africans living here has exploded. Tens of thousands have flocked to the south, where they are putting down roots, establishing communities, marrying Chinese women and having children.

In the process, they are making tiny pockets of urban China more racially diverse -- and forcing the Chinese to deal with issues of racial discrimination. In the southern city of Guangzhou, where residents refer to one downtown neighbourhood as Chocolate City, local newspapers have been filled in recent months with stories detailing discrimination and alleging police harassment against the African community.

"In Guangzhou, to be frank, they don't like Africans very much," said Diallo Abdual, 26, who came to China from Guinea 1 1/2 years ago to buy cheap Chinese clothes to ship back to West Africa for sale.

With the recession, his business has dried up, his money is gone, and he has overstayed his visa. Now, like many Africans here, he spends most of his days at Guangzhou's Tangqi shopping mall avoiding the police.

"The security will beat you with irons like you are a goat," he said. "The way they treat the blacks is very, very bad." He and others pointed out the spot where in July several Africans jumped from an upper-floor window to escape an immigration raid. One migrant was reported critically injured in the fall, and a large number of Africans marched on the local police station in protest.

The Guangzhou Security Bureau said in a statement at the time that it had a duty to check that foreigners living in the city were there legally.

Long-held prejudice

In the 1960s, China began befriending African countries, supporting liberation movements in Africa and bringing African students to China in a show of Third World solidarity. But that official policy of friendship has always been balanced against another reality -- the widely held view here that black people are inferior, that white people are wealthy and successful.

"The kind of prejudice you see now really happened with the economic growth," said Hung Huang, a Beijing-based fashion magazine publisher and host of "Straight Talk," a nightly current affairs talk show. "The Chinese worshiped the West, and for Chinese people, 'the West' is white people."

Hung, 48, said her generation was "taught world history in a way that black people were oppressed, they were slaves, and we haven't seen any sign of success since. The African countries are still poor, and blacks [in America] still live in inner cities." Hung noted that Chinese racial prejudices extend to the country's own minority groups, including Tibetans and Uighurs -- or anyone who is not ethnically Han Chinese.

The view of African Americans as poor and oppressed fits into the official narrative of the United States as a place of glaring inequalities. China's most recent annual report on the United States' human rights record in 2008, released in February, made no mention of Obama's historic election. But it said, "In the United States, racial discrimination prevails in every aspect of social life."

"Black people and other minorities live at the bottom of the American society," the report said. "There is serious racial hostility in the United States."

Sherwood Hu, a Shanghai-based filmmaker, was one of the judges on "Go! Oriental Angel" who gave Lou high marks. "Before the Cultural Revolution, China considered black people our brothers and white people our enemies," Hu said. "But deep down, they're a little bit afraid of black people."

The racial animosity here reflects a prejudice dating to China's mainly agrarian past: Darker skin meant you worked the fields; lighter skin put you among the elite. The country is rapidly industrializing and urbanizing, but that historical prejudice remains. High-end skin-whitening products are a $100 million-a-year business in China, according to industry statistics.

'Are we racist?'

Chen Juan, 27, a secretary in an English-language training school in Beijing, regularly uses skin-whitening products and carries an umbrella on summer days. "For me, the whiter, the better. Being white means pretty," she said. "If someone looks too black, I feel they look countrified and like a farmer. . . . Being white is prettier than being black."

"In my impression, black people, especially Africans, are not clean enough," Chen continued. "To be frank, I just feel black people are too black. Definitely, I wouldn't consider having a black guy as my boyfriend even if he were rich."

P.C. Chike, a Nigerian businessman in Guangzhou who has been in China for five years, exports wigs and extensions made from Chinese hair to his home country. He married a Chinese woman from Beijing, and they have a son, with another on the way.

"Chinese don't like Africans. They don't like black skin," Chike said. "China trying to embrace Africa is a political statement. The question is, how do they treat black people?"

Li Wenjuan, Chike's wife, said she thinks racial attitudes are less coarse in Beijing than in Guangzhou, where the commonly used Cantonese term for blacks translates as "black ghosts."

Some here say Obama's presidency is causing a major shift in attitudes. Others, however, say many Chinese rationalize his election as a fluke of the American system or suggest that Obama, whose mother was white, isn't "really" black.

"It will be really interesting to see what happens when he comes to visit, because I really think the Chinese have a hard time with it," Hung said. "Nobody has dealt with this question of what this means to our sense of race. It's a kind of self-examination that Chinese -- including myself -- need to go through: Are we racist?"

China has detained several dissidents and campaigners ahead of US President Barack Obama's much-anticipated first visit to the country, their relatives and close contacts told AFP Saturday.

Obama arrives in Shanghai on Sunday and moves onto Beijing the next day for a four-day maiden presidential trip during which he has been urged to raise human rights with the Asian giant's top leadership.

But as the visit drew close, the head of an activist group for parents whose children were sickened by tainted milk in China had been detained, his wife told AFP.

"Zhao Lianhai was criminally detained for 'provoking an incident'," Li Xuemei said in a text, without giving further details.

According to activist group Human Rights in China, Zhao was handcuffed and taken away late Friday night by police officers who searched his house and took away computers, a video recorder, a camera and an address book.

When Zhao refused to go with them, as the summons did not state a cause, the police officers filled in "provoking an incident" in the summons, the group said. Police in Beijing would not comment on the case.

Zhao has campaigned relentlessly for parents whose children suffered from drinking milk tainted with the melamine chemical, which killed six children and sickened nearly 300,000 others in a scandal that erupted in September 2008.

Qi Zhiyong, a dissident who lost a leg during the crackdown on the 1989 Tiananmen democracy protests, said he had also been detained for trying to organise a human rights seminar on November 9 in a Beijing park.

In a text sent to AFP, Qi said he and fellow organisers had planned for the seminar to last until the end of Obama's visit.

He had also applied to police to protest the US President's visit, "to press him to pay attention to human rights in China, people's livelihoods and the relatives of jailed people, as he comes only to talk about climate change."

Qi said he was being held in the Beijing suburbs and had been charged with unlawful assembly and disturbing the social order.

He added that Li Jinping, who every year tries to organise commemorations of deposed former leader Zhao Ziyang, who opposed the use of force to quell the 1989 protests, had also been detained.

Yang Qiuyu, a housing rights activist, and more than 30 other petitioners had also been taken away, Qi said.

The dollar stays flat against the Chinese Yuan, even as it loses value against other major currencies. The dollar is down to $1.50 per Euro, compared to $1.27 at this time last year (sorry to folks daydreaming about summer in Italy). It's down against the Canadian dollar, the Japanese yen and the entire "broad dollar index" tracked by the Federal Reserve. But the dollar is unchanged against the Chinese Yuan (unless one considers 6.836 to 6.827 a drop).
China's deliberate policy of pegging the Yuan to the dollar makes American imports of Chinese goods artificially cheap and gives American companies opening factories in China an artificial subsidy. That's good for China but bad for America, and helps explain our soaring trade imbalance with China. An extraordinary 83 percent of America's non-oil trade deficit is with China. During the downturn, our trade deficit with other countries has been shrinking -- but not with China.

Chinese scientists artificially induced the second major snowstorm to wreak havoc here in Peking, reigniting debate over the practice of tinkering with Mother Nature.

After the earliest snow to hit the capital in 22 years fell on November 1, the capital was again shrouded in white Tuesday with more snow expected in the coming three days, the National Meteorological Centre said.

The Beijing Weather Modification Office communists artificially induced both storms by seeding clouds with chemicals, a practice that can increase precipitation by up to 20 percent.

On Tuesday, an official, as is standard government practice, simply lied and claimed the storm was "natural".

The people themselves have griped about the flight delays, traffic snarls, cancelled classes and other inconveniences of a surprise snow storm, saying officials could warn them if they are planning to toy with the clouds.Beyond the day-to-day hassles, experts said the weather manipulation had other undesirable side-effects in the longer term.

"No one can tell how much weather manipulation will change the sky," Xiao Gang, a professor in the Institute of Atmospheric Physics at the Chinese Academy of Sciences, told the paper.

"We should not depend too much on artificial measures to get rain or snow, because there are too many uncertainties up in the sky."

Zhao Nan, a Beijing engineer, was quoted as saying the more than 5,500 tonnes of erosive snow-melting chloride used on city roads Tuesday -- nearly half the annual allotment -- could "erode steel structures of buildings".

In 2005, the snow-melting agent was responsible for killing 10,000 trees in Beijing and decimating 200,000 square metres (2.15 million square feet) of grassland, the paper said, citing official statistics.

Despite a massive effort to clear the capital of snow that involved over 15,000 workers, many roads remained blocked, while highways into Beijing and in neighbouring Hebei and Shanxi provinces were closed, state propaganda reports said.

One day in late summer 2008, FBI and Secret Service agents flew to Chicago to inform Barack Obama's campaign team that its computer system had been hacked. "You've got a problem. Somebody's trying to get inside your systems," an FBI agent told the team, according to a source familiar with the incident.

Red China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

In its third-quarter monetary policy report, the communist People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.

"Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange rate formation mechanism," the central bank said in a 46-page monetary policy report.

The comments, published just days before a visit to Shanghai and Beijing by U.S. President Barack Obama, set out the possibility of a return to exchange rate appreciation that began with a landmark July 2005 revaluation.

The yuan strengthened by nearly 20 percent against the dollar until concern over the impact of the global financial crisis prompted Beijing to hit the brakes in the middle of last year to protect exporters.

The yuan has been stuck at around 6.83 per dollar ever since, drawing increasing ire from other countries, especially as it has followed the dollar downwards against other currencies.

The dollar has dropped 13 percent against a basket of major currencies including the yen and euro since mid-February.

Back to a Basket?

Some analysts have called for the return to a genuine basket of currencies, which the central bank said in 2005 it would use as a reference for the yuan.

"I think the wording change ... shows that it is an irresistible trend for China to resume yuan appreciation," said Xing Ziqiang, an economist at China International Capital Corp (CICC) in Beijing.

"It is not sustainable for the yuan to always be pegged to the U.S. dollar; after all, the repegging since late 2008 was just part of China's measures to address the global financial crisis, and now the impact of the financial crisis is fading, so the yuan should resume appreciation sooner or later."

The central bank's report came just hours after data that showed the world's third-largest economy had firmly put the worst of the global financial crisis behind it. Factory output growth surged to a 19-month high of 16.2 percent in October.

While exports were still down in year-on-year terms, economists pointed to the likelihood that they would start growing again soon.

Some analysts said the statement could have been timed to send a signal ahead of Obama's Nov. 15-18 visit to China.

Obama told Reuters on Monday that he planned to raise the currency issue during his trip.

However, fascist Beijing is increasingly facing complaints about its currency from other emerging economies, which see an undervalued yuan as undercutting them in global markets.

No Sudden Shift

Those concerns were evident in a draft statement from APEC finance ministers circulated on Wednesday, in which they call for flexible interest rates and exchange rates as a way of redressing economic balances.

"We agreed that flexible prices, including exchange rates and interest rates, play a critical role in allocating resources efficiently, and can facilitate the adjustments needed to support balanced and sustainable global growth," said the latest draft statement by the finance ministers dated Nov. 10.

While the statement could change in its final form, a deputy Chinese finance minister was present at discussions on it, suggesting some level of agreement by Beijing on the wording.

However, analysts were quick to caution against expecting any sudden shift in the yuan's actual value, given China's penchant for carrying out any reforms gradually.

"The central bank's worries about capital flows, liquidity, and inflation signal growing pressure for yuan appreciation," said Ben Simpfendorfer, strategist with the Royal Bank of Scotland in Hong Kong.

"But I'm not looking for gains in the currency until the second quarter as the export sector still faces large challenges and margin pressure." Markets priced in a slightly greater appreciation over the coming year.

Offshore one-year dollar/yuan non-deliverable forwards (NDFs) fell to 6.6075 bid late on Wednesday compared with Tuesday's close of 6.6320.

Yuan appreciation implied by NDFs, which moves inversely with the forwards, was around 3.3 percent in a year compared with 3.06 percent before the announcement.