China looms as key challenge on Obama's Asia tour

By Caren Bohan

WASHINGTON (Reuters) - President Barack Obama leaves for Asia on Thursday with the U.S. economy, jobs and a yawning trade deficit with China looming large on his agenda.

Global climate change, the North Korean and Iranian nuclear disputes and Obama's review of his Afghanistan strategy are also major topics for his talks with the Chinese and other officials on the first trip of his presidency to Asia.

In an interview with Reuters this week, Obama described China as a "vital partner, as well as a competitor."

But he warned of "enormous strains" in relations between the world's two most powerful nations if economic imbalances between them were not corrected.

Those imbalances -- America's excessive consumption and borrowing, facilitated by China's aggressive export strategy and purchases of U.S. debt -- are seen by many as a major cause of the boom and subsequent bust in the global economy.

Obama's nine-day tour will begin in Tokyo and includes a stop in Singapore for the Asia-Pacific Economic Cooperation summit, followed by visits to Shanghai, Beijing and Seoul.

Obama said he would talk to the Chinese about revaluing their currency, the yuan, as well as encouraging Chinese consumers to spend more and opening Chinese markets further to U.S. goods.

With the U.S. unemployment rate now at 10.2 percent, the Obama administration hopes an emphasis on building export opportunities will play well at home.