Obama and Wen discuss economy

Barack Obama has held previously unscheduled talks with China's premier, Wen Jiabao, after a week of sharp exchanges between the two nations.

Obama and Wen met on Saturday on the sidelines of the East Asia Summit on the Indonesian resort island of Bali, following public quarrels over currency, trade and a territorial dispute in the South China Sea.

The meeting came after spats between Beijing and Washington over trade, currency and territorial rights in the South China Sea.

A White House official said president Obama discussed the value of China's currency as well America's
interests in the South China Sea.

"The principal focus of the meeting was on economics," Tom Donilon, Obama's top national security adviser, had told reporters.

Hillary Clinton, the US secretary of state, Donilon, joined Obama for the talks, an AFP photographer present at the start of the meeting saw.

Obama announced on Friday the "transfer" of 24 used F-16 fighter jets to Indonesia to bolster its poor air defence.

The aircraft will be updated with advanced computers, improved radar and avionics, and the capability to carry and field more advanced weaponry and sensors, the US defence department said.

Ties with Australia

In Australia on Thursday, Obama said the US was switching focus to Asia and the Pacific as he announced an increase in US military presence in the region.

"We will preserve our unique ability to project power and deter threats to peace," he said.

Obama also said he stood for an international order in which "commerce and freedom of navigation are not impeded", in an apparent reference to China and its dispute with Taiwan and four ASEAN countries over the South China Sea.

China lays an all-encompassing claim to the sea and other claimants have complained it has grown more assertive by harassing ships travelling in the area.

Wen said in Bali on Friday that "outside powers" should not meddle in the dispute "under any pretext", in a veiled warning to the US.

"The disputes over the South China Sea between the relevant countries in the region have existed for many years," he said.

"They should be settled through friendly consultation and negotiation between the sovereign states directly concerned."

The US insists it is not taking sides in the dispute, but said it has a national interest in the area as a Pacific nation.

'Premiere arena'

China has said it is opposed to a discussion on the maritime disputes at the summit, but Obama said on Friday the gathering was "the premiere arena" to discuss issues such as maritime security.

"The East Asian leaders' meetings are occasions for regional economic co-operation, not a tribunal for quarrels over complex security or maritime issues," an opinion piece in China's official Xinhua news agency said.

"However, certain countries are complicating the issues by attempting to bring them to the meetings.

"And disappointingly ... Clinton signed a declaration with her Philippines counterpart on Wednesday to call for multilateral talks to resolve maritime disputes, such as those over the South China Sea."

The East Asia summit was expected to result in a document to be called the Bali Principles, which calls for countries to respect the sovereignty and territorial integrity of other states, renounce the use of force and settle disputes through peaceful means, officials said.