Obama scores diplomatic victory over China

US President Barack Obama on Saturday succeeded in hauling a maritime dispute into an Asian summit despite China's objections, in a diplomatic victory at the end of his Pacific tour.

The "robust" discussion on the South China Sea territorial row, at the East Asia Summit on the Indonesian resort island of Bali, took place after a week of increasingly sharp exchanges between the two world powers.

Washington's new diplomatic campaign to assert itself as a Pacific power has alarmed China which sees the initiatives, including stationing US Marines in northern Australia, as intruding into its sphere of influence.

China's Premier Wen Jiabao has warned against interference by "external forces" in the maritime wrangle, over a strategic and resource-rich area where several regional nations have overlapping claims.

But shortly after hastily arranged talks between Obama and Wen on the summit sidelines, the group leaders held a "very robust conversation on maritime security and the South China Sea" according to a US administration official.

Obama was "encouraged" by the talks and the tone was "constructive," the official said on condition of anonymity, referring to a famous Wild West gunfight by saying it was "not a shootout at the OK Corral".

There was no "tirade" from Wen, he said, adding: "Even though maybe he started off maybe a little grouchy, by and large he was very measured."

Chinese state media indicated that Wen reluctantly agreed to the issue being raised at the 18-nation summit.

"I don't want to discuss this issue at the summit, however, leaders of some countries mentioned China on the issue. It's impolite not to make a return for what one receives," he said according to the official Xinhua news agency.

"The South China Sea is an important transportation passageway for China, regional countries and even the world. The Chinese government has made a positive contribution to safeguard the navigation security in the South China Sea," he added.

China, which claims the South China Sea in full, had insisted on discussing the dispute individually with its smaller neighbours but the US has now succeeded in making it a topic for debate at an international forum.

The region is a conduit for more than one-third of the world's seaborne trade and half its traffic in oil and gas, and major petroleum deposits are believed to lie below the seabed.

China claims all of it, as does Taiwan, while four Southeast Asian countries declare ownership of parts of it, with Vietnam and the Philippines accusing Chinese forces of increasing aggression there.

"The US position here is a principled position -- the United States is a Pacific power, it is a trading power, it is a maritime power," US National Security Advisor Tom Donilon said in Bali.

"The United States has an interest in the freedom of navigation, the free flow of commerce, a peaceful resolution of disputes (but) we don't have a claim, we don't take sides in the claims."

Donilon said Obama discussed concerns about what Washington sees as the artificially low value of the yuan and trade disputes that he raised with China's President Hu Jintao in Hawaii last week.

Wen told Obama China would increase the flexibility of the yuan while stressing that reforms had already had an effect, Chinese state media reported.

"We are closely watching the changes to the yuan's exchange rate ... and will encourage the yuan's flexibility in both directions," CCTV quoted Wen as saying.

Wen and Obama met on the same day that a commentary by China's official Xinhua news agency dripped with contempt for his attempt to show that the United States considers itself a Pacific power.

As well as the deployment of 2,500 US Marines to northern Australia, Obama and has also irked Beijing with his support for expanding negotiations on a pan-Pacific trade deal in which China is not included.

"If the United States sticks to its Cold War mentality and continues to engage with Asian nations in a self-assertive way, it is doomed to incur repulsion in the region," the Xinhua commentary said.

"It is also called upon to guard against sparking disputes and encroaching on others' interests," it added, in an apparent reference to the row over the South China Sea.

China is also likely to be concerned by a dramatic US foray into Myanmar, its resource-rich ally and southern neighbour.

On Friday Obama said he would send Hillary Clinton there next month, the first visit by a US secretary of state for 50 years, as Aung San Suu Kyi's National League for Democracy said it would take part in upcoming by-elections.

Washington is looking to encourage tentative reforms by the new nominally civilian regime in a country which for decades was ruled by a military junta, and developed close ties to Beijing while the West imposed sanctions on it.

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