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Chinese President Hu Jintao acknowledged “differences and sensitive issues” with the US

China’s President Hu Jintao is to hold talks with his US counterpart Barack Obama later, on the first full day of his state visit to the US.

The two leaders are expected to tackle thorny issues from currency and trade disputes to defence and security matters, that have dogged relations.

At a joint news conference, President Hu is expected to face questions on China’s human rights record.

Hundreds of rights activists have held protests outside the White House.

Mr Hu arrived at Andrews Air Force base outside Washington on Tuesday, greeted by US Vice-President Joseph Biden, and attended a rare private dinner at the White House hosted by President Obama.

As Mr Hu dined, activists outside the White House held aloft banners urging the US president to to “admonish Hu” over China’s human rights abuses.

In particular they want him to call for the release of the jailed Nobel Peace Prize winner Liu Xiaobo, correspondents say.

Analysts say Mr Hu’s four-day visit is the most important by a Chinese leader in 30 years given China’s growing military, economic and diplomatic clout.

The White House is laying on a full formal reception with a military guard, lunch at the State Department, dinner at the White House, and meetings with some of America’s most powerful business leaders from firms like General Electric, Coca-cola and Boeing.

During talks in the Oval Office in a few hours, White House aides have pledged the US president will engage his counterpart on the top issues.

“Whether we’re dealing with economic discussions, whether we’re dealing with those in the security realm, or whether we’re doing those with human rights, I think this is an argument that we have and we’ll continue to make to the Chinese and push them to do better,” spokesman Robert Gibbs told reporters.

The BBC’s Damian Grammaticas in Beijing says the US wants a co-operative relationship, but is starting to talk tougher over Beijing’s management of its exchange rate and its support for the regime in North Korea.

These differences could surface when the two presidents hold a rare, joint press conference later, he says.

This is likely to be Mr Hu’s last state visit to the US before a handover of power is completed in China in 2013.

US Secretary of State Hillary Clinton has said that America and China are “at a critical juncture”.

The US buys far more than it sells to China – the US claims this is because China has kept its currency artificially weak. In fact trade with China accounts for 14.3% of all US trade – the States only does more trade with Canada. Until the 1990s, the US economy grew strongly while China remained relatively stagnant. Since 2000 China’s growth rate has surged, driven by economic reforms, a huge workforce and massive investment. The US defence budget is the biggest in the world at around $700bn. China has the second largest – but its official military budget has soared since 1999 as the country’s economy has grown. China is the most populous country in the world ahead of India and the US. Its huge population has helped drive economic growth but it has also put huge stress on resources and air and water pollution are big problems.

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Both sides recognise the deep divisions that have strained relations over the past year – the value of the yuan, the huge trade gap, human rights, US arms sales to Taiwan.

The US is also concerned by China’s growing military strength.

Earlier this month, during a trip to China by US Defence Secretary Robert Gates, Beijing confirmed that it had tested a prototype J-20 stealth fighter, invisible to radar.

The US has also bolstered its support for its East Asian allies, most notably South Korea and Japan, amid maritime rivalries with China in the Pacific.

The two powers have also been at loggerheads over how to curb North Korea’s belligerent behaviour and advancement of its nuclear programme.

In a rare interview with foreign media, Mr Hu acknowledged the “differences and sensitive issues”, but said co-operation rather than confrontation would serve both sides best.

Later in the week, Mr Hu is expected to travel to Chicago, where some predict he will sign a series of trade and investment agreements.

The US is encouraging China to buy tens of billions of dollars of aircraft from Boeing, car parts, agricultural goods and beef.

Trade between the US and China is worth $400bn, up from $100m 30 years ago, when the US formalised relations with the communist state.

China also holds the world’s largest foreign currency reserves at $2.85tn and a major share of US government debt.

Ahead of Mr Hu’s arrival in the US, a Chinese trade mission signed six deals with US companies in Houston worth $600m (£376m) – which analysts say is an attempt to create a “positive” atmosphere for the talks.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.