U.S., China face off over sea dispute

“We've watched this for a while and it's entering a much more dangerous phase.  It's stupider than Europe and the consequences could be far more devastating. The U.S. and China are rushing towards world war over the South China Sea. This cannot be stopped until infinite growth is unplugged”. -- MCR

* China pushes back on sea dispute after U.S. pressure

* Underlines view against multilateral talks on dispute

* U.S. says China's heavy-handed approach will backfire

* Caps major diplomatic push by Obama to court Asia region

By Ben Blanchard and Laura MacInnis

NUSA DUA, Indonesia, Nov 19 (Reuters) 

China pushed back on Saturday against a week of U.S. pressure to resolve a rancorous dispute over territorial claims in the South China Sea, a crucial, mineral-rich commercial shipping lane at the heart of growing tensions among Asian leaders.

Chinese Premier Wen Jiabao chastised President Barack Obama for raising the issue during an Asia-Pacific leaders summit, hours after Obama told Wen the United States wants the sea lanes kept open and peaceful, capping two weeks of Sino-U.S. tensions.

Vietnam, the Philippines, Taiwan, Malaysia and Brunei all have claims to parts of the sea lanes, while China claims large parts of the region, which might hold rich deposits of oil and gas.   

Obama ended a nine-day trip with a meeting with Wen where, according to U.S. officials, he raised U.S. concerns over festering economic issues such as China's currency policy, after huddling with Asian leaders in a concerted effort to court the world's fastest-growing region.

U.S. lawmakers have long argued Beijing keeps the value of the yuan down to help drive the country's exports engine, a stance they say costs American jobs.

Wen defended Beijing's currency stance, stressing that from late September to early November, offshore foreign exchange markets showed "expectations of a depreciation in the renminbi exchange rate" and that China will also strengthen the renminbi's trading flexibility in either direction, without elaborating.

But it was Obama's comments on the South China Sea, a possible flashpoint in Asia, that drew Beijing's ire.

Wen said the South China Sea issue should be resolved directly among related sovereign countries "through friendly consultation and negotiation", state-owned news agency Xinhua reported, a comment that suggests U.S. exclusion from the dispute.

He added that the East Asia Summit on the Indonesian island of Bali, where Obama met with 17 Asia-Pacific leaders in three days of talks, was not "a proper occasion" to discuss the issue.

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