Robert Hormats, the US Under Secretary of State for Economic, Energy and Agricultural Affairs, said "tensions, misunderstandings and frictions" were inevitable between major trade partners and could be resolved through talks.

"We have trade disputes with a lot of countries with whom we have very close economic ties and they have trade disputes with us," Hormats said in a speech to university students in Beijing ahead of Obama's visit, which begins Sunday.

"Many of these things can be negotiated out before they get to the WTO stage. I think we will do and China will do everything we can to avoid a trade war."

Tensions between the two countries intensified late last week when the United States slapped anti-dumping tariffs of up to 99 percent on imports of some Chinese steel products used in the oil industry.

China branded the decision an "abuse of protectionism" and retaliated by launching its own probe into US car imports.

The world's number one and three economies have traded a series of accusations of unfair trade practices since September when the Obama administration announced it would slap duties on Chinese-made tyres.

Hormats said Obama would discuss the trade disputes as well as energy cooperation and climate change with his Chinese counterpart Hu Jintao during his November 15-18 visit.

"Our two countries are perhaps the most important players (in the world) and to make it work, we have to work together," Hormats said.

Obama had hoped to reach an agreement with Hu on global warming so the two nations could go to key climate change talks in Copenhagen in December "with a green initiative", Hormats said, without elaborating.

"The success of the Copenhagen summit will depend ... on China and the US and other countries taking action," Hormats said.

earlier related report
Rio wants to work with spurned Chinalco: chief
Sydney (AFP) Nov 10, 2009 - Anglo-Australian miner Rio Tinto said Tuesday it was interested in collaborating with Chinalco, months after rejecting a massive cash injection from the state-owned Chinese firm.

Rio chief executive Tom Albanese also said the company hoped for a "timely and transparent resolution" of the case against top executive Stern Hu, who was arrested in China weeks after the 19.5 billion US dollar tie-up collapsed.

"We are still keen to work with Chinalco in future on projects of mutual benefit," Albanese told a conference in Perth.

"It is too early to say what these might be but I am encouraged that we have had some recent engagement," he added.

"We want the underlying common interests between Rio Tinto and China to once again drive us towards ever-deepening co-operation."

Rio snubbed Chinalco's offer in favour of a joint venture in Western Australia with bitter rival BHP Billiton in June. Albanese said a binding agreement was expected by December 5.

Chinalco reportedly turned down an offer to take a stake of up to five percent in the 116 billion dollar venture.

In July, the arrest of Australian passport-holder Hu and three of his colleagues amid fraught iron ore contract talks also drove a wedge between Canberra and Beijing.

China's vice-premier Li Keqiang called for a new era of cooperation between the key trading partners during a fence-mending visit last month, citing "extensive" common interests and enormous opportunities for development.

Albanese said Rio's long-term confidence in China as a customer and strategic partner remained "as strong as ever".

"Over the next five years, China is expected to consume more iron ore than Australia has exported throughout its history," he said.

"China will be crucial to the future wealth of this country."

The Reserve Bank of Australia last week lifted its growth forecasts on a bullish performance from the resources sector, where it said investment was at "historically high levels".

China was Australia's third-largest investor last year, behind the United States and Britain. It accounted for 49 of the 153 deals involving Asian investors, and forked out 6.78 billion US dollars, mostly in mining acquisitions.

Canberra in October approved Yanzhou Coal's 3.2 billion US dollar takeover of miner Felix, the biggest-ever by a Chinese firm. It has since given the green light to bids by Baosteel and Wuhan for Australian ventures.

Australia's top Treasury official Ken Henry has forecast a return to a decades-long commodities boom, fuelled by rocketing demand from fast-industrialising China and India.

BHP Billiton has said it expects China and India to drive a doubling in global steel demand in 15 years, and a surge in demand for energy of almost 40 percent.

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