Top officials from Beijing have descended on Washington for two days of talks on economic, human rights issues, and foreign policy issues.
While the administration of U.S. President Barack Obama has vowed to work with China to pursue mutual interests, the alliance is uneasy at best, and both delegations are faced with navigating a host of sticking points in bilateral relations.
China's controversial monetary policies, Washington's spiraling trade deficit with Beijing, and the recent uptick in crackdown on dissent under Chinese President Hu Jintao all loom over this, the latest installment of the annual U.S.-China Strategic and Economic Dialogue.
In opening the talks, U.S. Secretary of State Hillary Clinton, the head of the U.S. delegation, said Washington and Beijing "both have much more to gain from cooperation than from conflict."
"Some in our country seek China's progress as a threat to the United States. Some in China worry that America seeks to constrain China's growth," she said. "We reject both those views."
But U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke plan to press Beijing on what U.S. manufacturers say are unfair trade practices, including currency manipulation, that have cost U.S. jobs.
While China has let its currency, the yuan, appreciate modestly over the past year, U.S. manufacturers say it is still undervalued by as much as 40 percent. They want Congress to impose economic penalties on Beijing if it doesn't move faster to make changes.
U.S. officials have also said they want to see more progress on economic commitments made this past January during a visit by President Hu Jintao to Washington, including pledges to combat pirated software and to change policies that limit the ability of U.S. companies to compete for Chinese government projects.
"In China, building on the remarkable reforms of the last 30 years, the challenge is to lay a foundation for a new growth model driven more by domestic demand, with a flexible exchange rate that moves in response to market forces, with a more open, market-based economy, and a more developed and diversified financial system," said Geithner.
Chinese Vice Premier Wang Qishan, the country's top economic policymaker and the leader of the Chinese delegation at the talks, said further opening up the economy would not happen "overnight" and urged Washington to "refrain from politicizing" trade.
The U.S. trade deficit with China in 2010 was a record $273 billion.
Chief among Beijing's concerns is the looming debate in Congress over whether to raise the government's debt ceiling beyond the current $14.3 trillion limit. The United States is on track to reach that limit in a few weeks and Geithner has warned of a financial crisis, including the possibility of having to default on loans, if the Treasury is not allowed to borrow more.
China is the United States' largest foreign creditor and is seeking assurances that Washington will be able to keep paying interest on Beijing's $1.2 trillion worth of U.S. Treasury holdings.
Along with economic issues, the U.S. delegation plans to raise China's troubling rights record with the Beijing delegation.
At the opening of the talks on Monday, U.S. Vice President Joseph Biden said Washington has a "vigorous disagreement" with China on human rights and pledged to continue to raise the cases of detained activists, rights lawyers, journalists, artists, and bloggers.
Rights groups and some U.S. lawmakers have urged the Obama administration to make human rights a higher priority in its relations with China, especially in light of Beijing's recent intensified crackdown on dissidents.
Watchdogs say Chinese authorities are now carrying out their most severe attack on liberal speech in years, apparently in an effort to ensure that popular revolutions sweeping the Middle East and North Africa do not inspire similar uprisings in China. Authorities have detained dozens of dissidents in recent months, including world-renowned artist Ai Weiwei, whose outspoken views authorities had begrudgingly tolerated in the past.
As she has before, Clinton said greater respect for rights would benefit the Chinese state.
"We know over the long arc of history that societies that work toward respecting human rights are going to be more prosperous, stable, and successful," she said.
Chinese State Councilor Dai Bingguo, meanwhile, said that Beijing is making progress on the rights front, and encouraged U.S. citizens to visit to see "the friendship of the Chinese people" and to "get to know what the real China is."
On foreign policy, U.S. officials said Clinton will renew efforts to gain China's support in confronting nuclear threats from North Korea and Iran. Washington achieved a hard-won Chinese backing for a fourth round of UN sanctions targeting Iran's rogue nuclear program in July 2010.
This year's strategic and economic dialogue will also for the first time also bring top military leaders from both sides to the discussion, partly in an effort to help defuse tensions that were heightened last year by U.S. arms sales to Taiwan.
The heads of the Chinese delegation are scheduled to meet with U.S. President Obama late Monday.
compiled from agency reports