BEIJING: Online sales in China, the world’s largest web market, rose 22 per cent in 2010 as price-sensitive consumers turned to the Internet for cheaper products amid rising inflation, an industry report said.

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Washington, DC, United States (AHN) – Chinese President Hu Jintao, who will arrive in the U.S. on Tuesday for a state visit, refused to even accept Washington’s explanation of American economic woes, completely ignoring a U.S. demand for an appreciation of the Chinese currency.

Hu negated the concerns expressed by U.S. officials including Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton about China’s need to strengthen the “substantially undervalued” yuan because it puts other countries at a competitive disadvantage.

According to calculations with inflation counted in, the yuan is rising at a rate of about 10 percent a year, causing Geithner to add, “so if that appreciation was sustained over time, it would make a very substantial difference.”

Cautioning that China faces inflation problems that could lead to global concerns, Geithner said, “China presents enormous economic opportunities for the United States and for the world, but its size, the speed of its ascent, and its policies are a growing source of concern in the United States and in many other countries.”

Hu shrugged off these inflation related concerns, saying inflation was not the main pointer in assessing yuan’s value. He noted that a mechanism has been set to take care of fluctuations of the Chinese currency.

Speaking on U.S.-China relations at the state department last week, Hillary Clinton reiterated Secretary Geithner’s comments.

Clinton said,”China still needs to take important steps toward reform,” and urged China to allow its “currency to appreciate more rapidly.”

“These reforms, we believe, would not only benefit both our countries, but contribute to global economic balance, predictability, and broader prosperity,” she added.

According to media reports citing answers submitted to written questions from The Wall Street Journal and the Washington Post, Hu noted trade, energy and terrorism as areas for cooperation, cautioning the U.S. to “respect each other’s sovereignty, territorial integrity and development interests.”

The battle of words began last year when President Barack Obama, during a hectic schedule in New York, described the yuan exchange rate as a “real issue” and called for Beijing to let the yuan rise.

The following day at a dinner event hosted by the National Committee on U.S.-China Relations and the U.S.-China Business Council, Chinese Premier Wen Jiabao, who is responsible for managing the Chinese economy, the world’s second-largest behind the United States, told his audience, “If the renminbi [yuan] appreciates by 20 percent to 40 percent according to the requests of the U.S. government, we do not know how many Chinese companies will go bankrupt and how many Chinese workers will be laid off and how many rural workers will go back to homes and there will be major turbulence in the Chinese society.”

Even after Obama had spent most of a two-hour meeting with the Chinese premier in New York pressing for a stronger yuan, according to White House officials privy to the meeting, Wen later told journalists that “common interests far outweigh our differences” and that despite “disagreements of one kind or another between our two countries, the differences can be resolved.”

In the global economy, the West has criticized China for months for keeping the yuan at an exceptionally low value, claiming Beijing enjoys an advantageous position due its manipulated lower yuan value, as it makes Chinese exports cheaper.

China abandoned a fixed exchange rate to the dollar in June, but the present exchange rate is controlled by the People’s Bank of China, which sets a daily rate.

The dispute is now that Beijing has allowed the yuan to appreciate only 1.9 percent since abandoning the peg.

According to White House sources, although the currency exchange rate will be high on the agenda, the Obama administration will continue to follow a softer diplomatic route.

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The reduction in quotas is the latest in a series of measures by Beijing that has gradually curtailed much of the world’s supply of rare earth minerals.

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(12-26) 21:36 PST HONG KONG, China (AP) — Asian stock markets rose Monday, shrugging off a weekend move by China’s central bank to raise interest rates in a bid to rein in soaring inflation. In thin trading with some…

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Washington, D.C., United States (AHN) – The U.S. Treasury Department was defending itself Friday against allegations in a news report that it granted permission for numerous corporations to do business with Iran and other blacklisted countries.

The State Department classifies some of the countries as state sponsors of terrorism.

Officially, the U.S. government participates in an embargo against countries on the list.

Unofficially, the Treasury Department allowed U.S. firms to close about 10,000 deals in the past decade to sell to the countries under an exception for humanitarian aid.

Products sold to the blacklisted countries under the loophole in the law include cigarettes, chewing gum, Louisiana hot sauce and body-building supplements, according to the report in The New York Times.

U.S. firms have exported about $1.7 billion in goods to Iran in the past decade, according to government figures.

The report is a result of a three-year investigation by the newspaper that included a Freedom of Information Act lawsuit.

A Treasury Department spokesman downplayed the importance of the deals.

Treasury Under Secretary Stuart Levey said in a statement that the exports were “trivial in the context of our Iran policy.”

“This effort is having its intended impact,” Levey said. “Iran’s leadership is worried about its isolation from the international financial system and the other effects of sanctions.”

A primary goal of the embargo is to force Iran and other countries to comply with international law on nuclear proliferation and arms exports.

Cuba, North Korea and Sudan also are on the list of sanctioned countries.

Nuclear non-proliferation treaties say the Iranians would be allowed to develop nuclear material only for electrical power generation and medical treatments. They also must allow international inspections.

So far, the Iranians have denied entry to international inspectors.

In addition, the U.S. government claims to have evidence the Iranians are developing nuclear weapons.

The Obama administration and several Western nations extended the embargo against Iran this year by banning more Iranian companies from doing business with U.S. firms.

American companies that have used the humanitarian exception to do business in Iran include Kraft Foods, Pepsi, Bank of America, Citigroup, American Pulp & Paper Corp. and Hercules USA Inc.

Congress approved the humanitarian exception in 2000 that exempts agricultural and medical supplies from the sanctions.

The New York Times reported that the Treasury Department, under pressure from industry lobbyists, interpreted the law more broadly than Congress intended.

In one case, an American company bid on a pipeline project with permission of the Treasury’s Office of Foreign Assets Control to help Iran sell natural gas to Europe.

The project does not appear to fall under the exception in the federal law for agricultural or medical supplies.

In another case, Iranian Olympic athletes train with sports rehabilitation equipment purchased from an American firm.

The Treasury Department decides each application for exceptions on a case-by-case basis.

In the some cases, politicians trying to protect their home state businesses appear to have influenced the Treasury Department, The New York Times reported.

One example was a medical waste disposal firm in Honolulu. In 2003, its owner ordered 200 graphite electrodes from a Chinese firm that was blacklisted for selling missile technology to Pakistan and Iran.

The electrodes from China Precision Machinery Import Export Corp. were less expensive and easier to find than the ones sold in the United States, explained Samuel Liu, the medical waste plant’s owner.

The Treasury Department initially planned to deny the company’s application for an exception, according to The New York Times report.

While the electrodes were still on board a ship being sent to Hawaii, Liu made a $2,000 contribution to the office of Senator Daniel Inouye of Hawaii.

Inouye then wrote a letter to the Office of Foreign Assets Control asking for an exception to the sanctions law for the medical waste plant.

Shortly afterward, the Treasury Department granted the exception.

A spokesman for Inouye said the campaign contribution was unrelated to Inouye’s intervention for the medical waste firm.

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China’s consumer price index (CPI), a major gauge of inflation, rose to a 28-month high of 5.1 percent in November, the National Bureau of Statistics (NBS) said Saturday.

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An Australian entrepreneur is being detained in the southern Chinese city of Guangzhou in connection with a police investigation, his company says.

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HONG KONG (MarketWatch) — Chinese Premier Wen Jiabao was quoted in a Xinhua news report Wednesday as saying recently that the State Council, China’s Cabinet, is drafting measures to curtail sharp increases in the prices of commodities that affect people in their everyday lives. The report also said China’s Consumer Confidence Index dropped five points during the July-September quarter to 104 — the first fall in the reading in six quarters — as the pace of the nation’s inflation quickened.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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Beijing, China (AHN) – Credit rating company Moody’s upgraded China’s sovereign debt rating Thursday by one notch to an Aa3 from an A1 and indicated it might upgrade it again within the next year and a half.

An Aa3 rating is Moody’s fourth highest. Moody’s gave China credit for keeping budget deficits under control and expressed confidence it would manage inflation to avoid having it erode the standard of living in China.

China is the world’s largest exporter and has a lot of cash on hand because it has a budget surplus. China’s gross domestic product (GDP) grew 9.6 percent in the third quarter of 2010 compared to a year ago. However, that was a slowdown from Q1 growth of 11.9 percent and Q2 growth of 10.3.

Moody’s said it expects China’s growth to be around 9 to 10 percent this year and a slightly slower 8 to 9 percent next year.

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Seoul, South Korea (AHN) – Canadian Finance Minister Jim Flaherty announced Wednesday the signing of an agreement with the China Insurance Regulatory Commission. The deal allows Chinese insurers to invest in Canadian capital markets.

Flaherty, who is now in Seoul, South Korea to attend the G20 meeting, said the Chinese deal gives the Canadian financial markets access to a potential pool of $106 billion. He said the agreement is a vote of confidence for Ottawa’s economic prospects and soundness of the country’s financial systems.

It also sends the message to other countries that Ottawa is open to foreign investors despite the decision last week by the federal government of Canada to reject Australian mining giant BHP Billiton’s $40 billion offer to buy the Potash Corporation of Saskatchewan.

The agreement is the third under China’s Qualified Domestic Institutional Investor program, which allows approved institutional investors in China to invest funds overseas pooled from mainland residents to approved financial markets abroad.

The deal strengthens further Ottawa’s trade ties with Beijing. For the past five years, Canada’s exports to China have grown by almost 55 percent, making the south Asian giant the third largest export market for Canada and the country’s second biggest merchandise trading partner.

The agreement is the result of more than one year effort by Flaherty to convince China to consider Canada as an investment haven. In August 2009, Flaherty went to China with Bank of Canada Governor Mark Carney and in June this year the finance minister again visited China ahead of the G20 Toronto summit.

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