US-China dialogue with 'candid, to-the-point' talks

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The United States and China held "candid and to-the-point" talks at the start of three days of cabinet-level meetings aimed at managing the highly complex relationship between the world's two biggest economies, a senior U.S. official said.

The U.S. side, led on Monday by Deputy Secretary of State Antony Blinken, reiterated U.S. concerns about China's pursuit of territorial claims in the South China Sea, the official said.

U.S. worries about cybersecurity following massive attacks on government computers that U.S. officials have blamed on Chinese hackers would also be addressed "in very direct terms," the official said.

More than 400 Chinese officials are in Washington for the annual talks under the wide-ranging Strategic and Economic Dialogue (S&ED) framework, which will involve eight U.S. cabinet secretaries.

The meetings come at a time of waning trust and widening differences between the two countries, even though they maintain robust economic ties worth $590 billion in two-way trade last year.

U.S. concerns have been mounting about Beijing's challenge to its dominance of global finance and about restrictions on U.S. businesses in China.

U.S. President Barack Obama is struggling to secure backing from Congress for legislation needed to speed a 12-nation trade deal, which is the economic plank of his Asia policy intended as a counterweight to China's growing influence.

The two sides will try to ease tensions by stressing areas of cooperation, including climate change, shared concerns about Iran and North Korea's nuclear programs, the fight against Islamist militancy, and support for global development.

"We have agreed with the Chinese that we are going to try to expand those areas where our interests overlap and expand cooperation in those areas," the U.S. official said. But the aim was not to "paper over" contentious issues, or to "agree to disagree," but to narrow differences to avoid miscalculations.

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Despite the considerable areas of tension, China is hoping for a smooth set of meetings to prepare for a visit to Washington by President Xi Jinping in September.

Prospects for substantial outcomes from the cabinet-level meetings appeared slim, with any scant progress likely to be held over for announcement during Xi's visit, analysts said.

The sides are expected to discuss a Bilateral Investment Treaty that has been seven years in discussion but has been held up by restrictions on both sides, while China is likely to press its bid to add the yuan to the International Monetary Fund's basket of reserve currencies.

Blinken and Secretary of State John Kerry will chair the security side of the talks with State Councillor Yang Jiechi and Vice Foreign Minister Zhang Yesui on the Chinese side.

U.S. Treasury Secretary Jack Lew and Chinese Vice Premier Wang Yang will chair the economic elements, and the top Chinese officials will meet Obama at the White House on Wednesday.