Mr Hu did give Bush a general assurance he was working to make the Chinese currency more "flexible" but this fell far short of US demands for a dramatic revaluation of the yuan as a way to make US products more competitive in Chinese and global markets and reduce the trade imbalance.

The two leaders also failed to bridge differences over how to deal with Iran's nuclear ambitions. Mr Bush wants China to agree to tougher US Security Council action, but his arguments did not persuade Mr Hu.

Speaking in the Oval Office, the two leaders said their bilateral relationship had matured and they could discuss differences openly.

Stating that China wanted to boost its domestic demand and did not seek an excessive trade surplus, Mr Hu vowed to do more to stop the illegal piracy of American-made software and DVDs, but said Washington could help reduce the imbalance by allowing more high-tech exports to China. Mr Hu said China would continue to improve the yuan's exchange rate, although he gave no specifics.

Reuters