By Bob Turner and Randy Chen

(AXcess News) Washington and Hong Kong - "Lay off our Yuan."  That was the political predict given to deputy commerce minister, Zhong Shan, when he was ordered to Washington to meet with members of Obama's cabinet, including fed chair, Ben Bernanke and select lawmakers in trying to cool the emotional friction over China's currency.

In Beijing Thursday, the government-run news agency published stories nationwide blaming US media over the riff building between the United States and China over its currency valuation, spinning stories from the Wall Street Journal and Time Magazine out of context as if to say those publications actually influenced what goes on behind closed doors on Capitol Hill.

Meanwhile, the top US envoy to China, Jon Huntsman, tried to cool Eastern fears Thursday, assuring the Chinese government that the two countries will find a solution to the yuan exchange rate.

"I think in due time, it will be resolved to the satisfaction of both parties," Ambassador Huntsman said.

But critics argue the Yuan is so undervalued that it gives China unfair advantages and no matter how US diplomats couch the situation, the real issue will be whether Congress acts.

Premier Wen Jiabao said over the weekend that the yuan was not undervalued at all and have nothing to do with China's export surplus.  Yet China has faced rising costs for labor and materials with labor up 30 percent and materials 17 percent over the course of the last year.  Businessmen in China say if the Yuan's value was raised 40 percent, as critics in the West believe it should be, then Chinese businesses would find themselves in a position where the value of their goods in foreign markets wouldn't be as competitive and as result layoffs would occur.

The last time China gave into foreign currency pressure was in 2005 when the yuan was allowed to rise 20 percent in value, which squeezed many marginal profit businesses into extinction.  Even today, many Chinese manufacturers operate on very thin margins so even a 2 or 3 percent increase in the value of the yuan would ruin them.

Obama cancelled his Asian trip Thursday, citing the health care bill being weighed this weekend by Congress as being more important, yet the US President's refusal to go east at this juncture was taken by the Chinese government to mean he intended to toughen his administration's stance over China's currency value and trade.  Obama had stated a month ago that China's currency system depressed trade and hurt US businesses and he planned on getting "much tougher" with China as a result.