JOIN USObama said Beijing is keeping its currency artificially low against the dollar to make its exports more competitive.
"China -- its currency is valued lower than market conditions would -- would say it should be...And what that means is, essentially, that they can sell stuff cheaper here, and our stuff, when we try to sell there, is more expensive. So it gives them an advantage in trade."
Days ahead of his meeting with Chinese Premier Wen Jiabao in New York, Obama said "What we've said to them is, 'You need to let your currency rise in accordance to the fact that your economy is rising, you're getting wealthier, you're exporting a lot. There should be an adjustment there, based on market conditions'.
"They have said yes in theory, but in fact, they have not done everything that needs to be done. We are going to continue to insist that, on this issue and on all trade issues between us and China, that there -- it's a two-way street."
The US President said his suggestion to China would make the world economy "more stable".
"Look, it's good for us that China does well, in the sense that, first of all, having millions of people get out of poverty is a good thing for the world."
He said the suggestion, if China follows, would allow US "businesses to thrive."
"It's a huge market where we should be able to export a lot of goods. I mean, eventually I want some of that -- those nice monogram glass things -- to be in Shanghai and Beijing. But it's got to be fair...Our trade relationship has to be fair," he said at a meeting on jobs and economy.
"You can't just sell to us and we can't sell to you. And so we have been bringing more actions against China before the World Trade Organisation. We are going to enforce our trade laws much more effectively than we have in the past -- not because I'm anti-trade; I'm pro-trade.
"I just want to make sure that trade is good for American businesses and American workers. And over the last several years it hasn't always been," Obama added.