WASHINGTON, (Reuters) – President Barack Obama  hosted exiled Tibetan spiritual leader the Dalai Lama at the  White House yesterday, drawing an angry reaction from China  and risking further damage to strained Sino-U.S. ties.

Raising issues that quickly stoked China’s ire, Obama used  his first presidential meeting with the Dalai Lama to press  Beijing, under international criticism for its Tibet policies,  to preserve Tibetan identity and respect human rights there.

Obama sat down with the Dalai Lama — who is reviled by the  Chinese government as a dangerous separatist but admired by many  around the world as a man of peace — in the face of wider tensions  over U.S. weapons sales to Taiwan, China’s currency practices and  Internet censorship.

While defying Beijing’s demands to scrap the talks and  showing a willingness to irritate an increasingly assertive  China, the White House took pains to keep the encounter  low-key, barring media coverage of the meeting. But it later  posted a photo on its official website of the two men side by  side in conversation.

Beijing clearly was not placated, saying it was “strongly  dissatisfied” about the meeting and expected Washington to take steps  to put bilateral relations back on a healthy course.

Chinese Foreign Ministry spokesman Ma Zhaoxu said the  meeting between Obama and the Dalai Lama “violated the U.S.  government’s repeated acceptance that Tibet is a part of China  and it does not support Tibetan independence”.

Beijing did not threaten retaliation and its response was in line  with past denunciations of U.S. dealings with the Dalai Lama. But the  visit could complicate Obama’s efforts to secure China’s help on key  issues such as imposing tougher sanctions on Iran and forging a new  global accord on climate change.

Senior Chinese military officers recently had proposed their  country possibly sell part of its huge stockpile of U.S. bonds to  punish Washington for the a proposed $6.4 billion arms sale to  Taiwan, which China considers a renegade province.

“The thought process is definitely there, and it’s  worrying,” said T.J. Marta, president of Marta on the Markets,  a financial research firm in Scotch Plains, New Jersey,

China did in fact reduce its holdings of U.S. Treasuries to  $755.4 billion in November, seen by some analysts as a sign of  protest at U.S. policies.

But with China ranked as the United States’s second-biggest  creditor to the United States, White House economic adviser  Larry Summers played down the significance of Beijing’s $34 billion  paring-back of its portfolio. Adding to tensions, Obama vowed recently to address currency  issues with Beijing and to “get much tougher” with China on trade.  Washington complains that China keeps its currency undervalued,  hurting the competitiveness of American goods.