By Chris Buckley
WASHINGTON (Reuters) - President Barack Obama and his Chinese counterpart Hu Jintao confront stubborn rifts over North Korea and economic imbalances on Wednesday as they meet amid the pomp of a formal state visit.
The carefully choreographed summit is not expected to yield major breakthroughs on key disputes but the United States and China plan to announce a deal to boost cooperation on nuclear security, one of Obama's chief foreign policy goals.
Both presidents have vowed stronger cooperation between the world's two largest economies to try to heal strains of the past year over human rights, Taiwan, Tibet, Beijing's currency policies and the gaping U.S. trade deficit with China.
But taking major strides to narrow these disagreements will test the depth of their partnership.
Some in Washington and Beijing are treating the summit as a gauge of how well the two powers can work in concert as China's ambitions expand in line with its rapid economic growth.
Secretary of State Hillary Clinton called for more cooperation from China in dealing with North Korea's nuclear program and "provocative behavior." She also said the Obama administration was pressing Beijing "very hard to gets its entities into compliance" with U.N. sanctions on Iran.
"We bear special responsibilities as the first and second biggest economies ... because of the threat to world stability posed by the nuclear programs in North Korea and Iran," Clinton told Chinese television.
"So this is a critical juncture to determine how good the cooperative relationship between our two countries can be."
Hu has been reluctant to give ground to U.S. demands to intensify pressure on China's ally, North Korea, to abandon its nuclear ambitions. North Korea recently caused alarm by shelling a South Korean island and claiming advances in uranium enrichment that could boost its nuclear weapons capability.
Beijing also has bristled at U.S. demands for faster appreciation of its currency, the yuan, which would make Chinese goods relatively more expensive and possibly help lower China's trade surplus with the United States, which Washington puts at $270 billion.
U.S. lawmakers are impatient for results and a meager outcome at the summit could raise congressional pressure on China over the trade deficit and the way Beijing manages the yuan.
A survey by the American Chamber of Commerce in Shanghai showed a growing number of U.S. companies say China's enforcement of intellectual property rights has deteriorated in the last year and that the regulatory environment is the biggest hurdle to doing business there.
Hu is likely to raise his worries about U.S. economic and security policies, including arms sales to Taiwan, the self-ruled island that China deems an illegitimate breakaway province.
The arms sales to Taiwan, even at the time when cross-Strait relations are improving, is the single most important factor jeopardizing U.S.-China military ties, Major-General Yao Yunzhu, a senior military researcher, wrote in the official China Daily on Wednesday.
Beijing also wants the Obama administration to reassure it that China's big holdings of U.S. treasury assets are not threatened because of what some critics describe as loose U.S. fiscal policies.
Offering a tangible achievement for Hu's state visit in addition to billions of dollars in corporate deals, the United States and China planned to announce a deal to create a jointly financed security center in China.
The aim is to increase training to improve security at nuclear sites and keep better track of nuclear materials and could also entail joint exercises for responding to nuclear disasters and terrorism, a U.S. official said.
SWADDLED IN CEREMONY
The talks between Obama and Hu will come swaddled in ceremony, including a 21-gun salute and a grand dinner. They are unlikely to trade sharp public jabs that could upset the careful diplomatic stagecraft.
The images from the White House will be a valuable diplomatic laurel for Hu as he enters into his final stretch as China's leader before leaving office in late 2012.
China has sought to soothe U.S. ire about job losses and the trade deficit by sprinkling business deals that could be worth over $8.5 billion in the run-up to Hu's visit.
Raising hopes for more possible deals to come, several U.S. and Chinese business leaders are to meet on Wednesday at the White House. Obama and Hu are scheduled to drop by that meeting.
U.S. executives due to attend the meeting include Microsoft Corp. chief executive Steve Ballmer, Goldman Sachs chief executive Lloyd Blankfein, General Electric chief executive Jeff Immelt and Boeing chief executive Jim McNerney.
(Additional reporting by Matt Spetalnick and Caren Bohan in Washington, Ben Blanchard and Sui-Lee Wee in Beijing; Editing by John O'Callaghan)