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U.S. stresses need to reduce China trade imbalance

WASHINGTON (Reuters) - President Barack Obama's national security adviser pressed for efforts to reduce U.S.-China trade imbalances and also discussed ways to rein in North Korea in talks on Tuesday with China's foreign minister.

Obama, who joined the meeting with Chinese Foreign Minister Yang Jiechi, re-committed to improving global cooperation with Beijing as he prepared to host President Hu Jintao on a state visit to Washington on January 19, the White House said.

While Beijing and Washington are likely to use the summit to cast their relationship in a positive light, strains over China's currency and trade practices and tensions over North Korea are expected to loom large.

U.S. national security adviser Tom Donilon "stressed the importance of effective efforts to reduce imbalances in both the global economy as well as in U.S.-China trade," the White House said in a summary of Tuesday's wide-ranging talks.

U.S. complaints that China keeps its yuan currency too cheap, giving it an unfair trade advantage, are likely to feature in the meeting between Obama and Hu. The U.S. trade deficit with China rose 20 percent in the first 10 months of 2010 and could top $270 billion for the year.

The White House discussions between Donilon and the Chinese minister also focused on ways to work together to persuade North Korea to abandon its nuclear weapons program and "avoid destabilizing behavior" and about preventing Iran from acquiring nuclear weapons, the White House said.

North Korea, angry at live-fire artillery drills into what it says were its territorial waters, shelled a South Korean island in November, killing four people and sparking international condemnation. It is also accused of sinking a South Korean ship in March, killing 46 sailors.

North Korea has also triggered regional alarm by recently claiming fast progress in uranium enrichment, which would give it a second pathway to making nuclear weapons.

China has resisted calls from Washington and its regional allies, South Korea and Japan, to increase pressure on Pyongyang, which relies on Beijing for support. Beijing has instead urged all sides to return to talks.

In Tuesday's talks, Donilon and his Chinese guest also agreed on the need to ensure that the independence referendum in southern Sudan on Sunday "proceeds peacefully and on time and that the results be accepted by Sudan and the international community," the White House said.

(Reporting by Matt Spetalnick; Editing by Eric Beech)

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