China says Obama win offers opportunity to mend ties By Terril Yue Jones BEIJING (Reuters) - China's official media said on Thursday that ties with the United States were uneven in President Barack Obama's first term and mutual trust was "whittled down," but his re-election offered an opportunity to put the relationship back on track. A commentary issued by state-run Xinhua news agency shortly after Obama's election win seemed to indicate a sense of relief that continuity will be assured as Chinese leaders embark on their own transition of power. But it acknowledged that sore issues remained between the world's largest and second-largest economies. "As the two countries have been ever more economically interwoven, a new U.S. government perhaps should start to learn how to build a more rational and constructive relationship with China," Xinhua said. The new Obama administration perhaps should bear in mind that a stronger and more dynamic China-U.S. relationship, especially in trade, will not only provide U.S. investment with rich business opportunities, but also help to revive the sagging global economy. Losing Republican nominee Mitt Romney had talked tough on China throughout the campaign, repeatedly saying he would cite Beijing as a "currency manipulator" on his first day as president. Obama, by contrast, struck a less confrontational tone. But last year, he announced a U.S. "pivot" toward Asia that focuses attention on the Asia-Pacific and has unnerved Beijing. Now, as a re-elected president, he must manage a relationship that has become steadily more fraught across a range of issues, including trade, currency and commercial espionage. "With China-U.S. relations in such turmoil, no one can predict (if Obama) will adopt a strategically, economically and politically more benign policy toward China," said Shi Yinhong, director of the Centre for American Studies at Renmin University in Beijing. It's possible, but not necessarily so. On Thursday, China begins its own once-a-decade leadership handover as it opens its 18th Communist Party Congress. The new party chairman is virtually certain to be current Vice President Xi Jinping, who will take over as president in March. President-designate Xi and other Chinese leaders face competing pressures in managing the relationship with Washington. They acknowledge that stability in the U.S.-Sino relationship is of vital interest to Beijing. But they also must deal with constituencies inside the party and the People's Liberation Army who are comfortable with an increasingly assertive Beijing pressing its own interests, particularly in its own backyard. At the same time, tens of thousands of American troops are based to China's immediate east and west, in Japan, South Korea and Afghanistan. Washington has bilateral defense treaties with Australia, New Zealand, the Philippines, Japan and South Korea. U.S. planes and warships regularly circulate near China's borders. On top of that, the Obama administration's pivot last November reoriented U.S. military policy toward the Asia-Pacific region. The widely held suspicion in Beijing is that the U.S. strategy is to contain China, the rising power in Asia. "It is absolutely (a build-up)," said Ruan Zongze, deputy chairman of the China Institute of International Studies, the think tank of the Chinese Foreign Ministry. No matter what kind of narrative you use, the reality is that America in the past three years has been putting greater emphasis or focus on the west Pacific. That raises a lot of questions for China. The Obama administration's primary challenge is to reassure Beijing that the pivot isn't about containing China. "America has worked to bring China into the international system, including on trade, and China is now one of America's largest trading partners," said Nina Hachigian of the Center for American Progress, a think tank that aligns itself with Obama administration policy. That's hardly evidence of containment. If America is trying to contain China, it is doing a supremely lousy job. China has done nothing but grow and expand for the last 40 years. But critics believe China's own behavior in the region shows why Obama's ``pivot" is necessary. Beijing is increasingly flexing its military and diplomatic muscle in the South China Sea, where it has territorial disputes with Vietnam, the Philippines, Malaysia, Brunei and Taiwan. And thus far China has resisted talks on a multilateral "code of conduct" governing the South China Sea, making it Asia's biggest potential military hotspot. China's relations with Japan, its historic rival in Asia, have also badly deteriorated recently because of a territorial dispute over islands in the East China Sea. While the United States officially declares neutrality, it is treaty-bound to come to the aid of Japan in case of hostilities. But China is unlikely to push the envelope too far, most analysts believe, because the United States remains by far the biggest military power in the region, and Beijing has compelling economic reasons to maintain a working relationship with Washington. "The Chinese are going to press as much as they can, but not do anything that creates a serious crisis," said Thomas Metzger, a senior fellow at the Hoover Institution at Stanford University. (China's) fundamental goal is to modernize itself and bring the impoverished majority up and stabilize its rule, and that requires a peaceful environment and a good relationship with the USA. Additional reporting by Paul Eckert in Mexico City; Editing by Raju Gopalakrishnan