China's naval ships have paid visit to US for the first time in the six years, and the naval ships of two countries are conducting joint search and rescue maneuvers today (on Sunday) in Chinese waters.

"We are happy with the healthy and stable development of bilateral relations," said Hu.

Bush said that China and US all realize that working together can accomplish a lot in security in the world and prosperity of the people.

"China is a very important nation and the United States believes strongly that by working together we can help solve problems such as North Korea and Iran," said Bush.

He admitted there are some problems in bilateral trade, but promised to adopt the spirit of mutual respect to solve problems in the interests of people.

"With as much commerce between our countries as there is, there's going to be trade difficulties," Bush said, "but nevertheless we both adopt a spirit of mutual respect and the desire to work through our problems for the common good of our peoples."

As the "stakeholder" and "constructive co-operator", China and US increase mutual trust, appropriately deal with differences and push the advancement of constructive and co-operative ties, according to Hu.

He urged US to appropriately handle the question of Taiwan by keeping commitments and not sending any wrong signals to Taiwan independence forces.

Bush said that US understands the sensitivity of the question of Taiwan as well as its impact on Sino-US relations. The US Government does not have any change to its policy on Taiwan, he noted.

Hu also called for increasing co-operation in Asia-Pacific region to maintain the peace, stability and prosperity in the region.

The two sides should expand exchanges in such sectors as anti-terrorism, non-proliferation, defence, energy, aerospace, science and technology, education, culture, public health and youth so as to enrich contents of bilateral partnership.

The US welcomes the development of China and does not worry about competition caused by China's development, said Bush.

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