Xinhua News Global Edition

by Jiang Yaping and Mimi Chau

The U.S.-China relationship is so important that it will continue on a bilateral basis rather than involving Australia or other countries, Professor Geoffrey Garrett, chief executive of the U.S. Studies Centre at Sydney University said on Friday.

"The U.S. and China want to rebalance their economic relationship. America needs to save more and consume less, whereas China needs to consume more and save less," he told Xinhua in an exclusive interview after a media briefing on U.S. President Barack Obama's visit to Australia. The visit, originally planned for next week, was postponed to June due to Obama's domestic health care reform.

Garrett said Obama was keen to deliver on the notion of becoming America's "first Pacific President". The U.S. President will look to strengthen alliances and build new partnerships with the nations of the region to cope with challenges of the 21st century.

"Asian regionalism is the big priority for Obama going forward. Australia is already involved in the Asian groupings through the East Asian summit, America is not, so for Australia and the U.S. to find a position in the Asian grouping is very important."

Garrett noted the Australia-China relationship is clearly a different one.It is ultimately about Chinese foreign direct investment into Australia. Is Australia ready and willing to have direct Chinese investment in the minerals sector in Australia?

"The answer is people in Australia are sceptical and concerned about that, but going forward you would expect there are big incentives for Australia to partner with Chinese companies to be more effective in mineral extraction... but these relationships are bilateral, not a triangular relationship," he said.

In regard to Australian policy towards China, Garrett believes Prime Minister Kevin Rudd has tried to pursue a very balanced policy towards China and that is appropriate.

"I think (Australian) Prime Minister Kevin Rudd understands this, and people were looking to him because of his language skills... but he has not overplayed ...which makes perfect sense because the China-U.S. relationship is intense enough as it is," Garrett said.

The professor predicted Obama's plan to expand U.S. exports by 50 percent in five years would make trade the big Asia-Pacific story of 2010.

Talking about Washington's ties with Beijing, Garrett said the big issue in the next month "will be the U.S.-China exchange rates- - there will be pressure on China to be more flexible on exchange rates as it could be damaging to U.S. exporters."

The challenge ahead is for the U.S. to engage with the Asian partners for the Trans Pacific Partnership towards the goal of a free trade area in the Asia Pacific region.

Garrett is confident President Obama's rescheduled visit to Australia in June will go ahead because of the high value he places on U.S. relations with the Asia Pacific.