Obama and Chinese Premier Wen Jiabao, meeting on the sidelines of the UN summit in New York, also announced that Chinese President Hu Jintao would visit the US next year. US officials said the visit would likely be in January.
Speaking ahead of a meeting, Obama said cooperation between the world's two largest economies remained critical to the globe's recovery from recession.
"Although the world economy is now growing again, I think it's going to be very important for us to have frank discussions and continue to do more work cooperatively in order to achieve the type of balance and sustained economic growth that is so important," Obama said.
US officials said the ongoing dispute over the value of the yuan currency dominated the talks and that Obama made clear to Wen that China needed to take more drastic action or face consequences.
Obama "made clear that ... he's going to protect US economic interests and that we look for the Chinese to take actions", said Jeff Bader, a White House advisor on Asian affairs. "If the Chinese don't take actions, we have other means of protecting US interests."
The US considers the yuan undervalued despite the Asian power's pledge in June to begin allowing the currency to appreciate. China has rejected the US accusations, and Wen on Wednesday told Bloomberg News that a significant rise in the yuan could lead to serious job losses in China.
Yet US lawmakers are set to step up the pressure. A congressional panel Friday is expected to move forward with legislation that would allow the US to impose tariffs on China by considering the undervalued yuan a barrier to trade.
A vote in the House of Representatives could take place next week, and the Obama administration has not said it will oppose the legislation.
Wen said Thursday that he engaged Obama with a "candid and constructive attitude" and touted a series of areas where the United States and China were cooperating, including the financial crisis, climate change and trade.
"In spite of the disagreements of one kind or another between our two countries, I believe these differences can be well resolved through dialogue and cooperation," Wen said