Chinese President Hu Jintao’s visit to the US has come at a time when the Americans are becoming increasingly uncomfortable with their country’s trade gap with China. According to the US Census Bureau’s Foreign Trade section, the US imports from China in 2010 constituted a whopping $ 344.1 billion, while its exports to the emerging global power were worth just $ 81.8 billion. On the one hand, trade increases people-to-people contact and promotes understanding among nations; on the other hand, its imbalance could become a source of friction between countries, as is the case with the US and China. China’s economic powerhouse is resented by the American industry because it is depriving it of its fair share of the domestic market. The US holds China’s depreciation of its currency in terms of dollar responsible for this situation, which gives a competitive edge to its products in the international market. This area is a potential source of conflict. Ironically, China is taking full advantage of free trade in a capitalist economy to the disadvantage of the US. Another issue of concern for the US is China’s increasing military strength and its ability to project power in South China Sea. President Obama’s warning that the US would re-deploy its force in Asia if China did not take a harder stance against North Korea, which is marching down the nuclear path, is a veiled threat. This must be seen in the context of China’s rising economic power with much surplus capital. It was given that it will not only bolster its defences, but also strengthen it military outreach to protect its interests in strategically important regions. This could become a cause of possible military escalation on both sides, and hence was an important consideration of the stated or unstated mutual agenda.Although President Hu Jintao’s visit saw a signing of $ 46 billion worth of trade deals, there was no major breakthrough. However, this does not undermine the significance of this visit as a major step toward enhancing cooperation and understanding. It would be in the entire world’s interest if the two countries manage to build trust and remove irritants. *