China and US share words, but do they share trust?

As U.S. and Chinese officials gather in Beijing to discuss contentious strategic and economic issues from cyber security to currency policy, the most pressing priority is for the two nations to fix their deepening mistrust, say analysts.

The annual two-day U.S.-China Strategic and Economic Dialogue—or S&ED—kicks off on Wednesday, with Secretary of State John Kerry and Treasury Secretary Jacob Lew representing the United States and State Councilor Yang Jiechi and Vice Premier Wang Yang representing China.

"The stakes may prove very high in this largely hidden dimension of what transpires at this S&ED," said Kenneth Lieberthal, senior fellow at the Brookings Institution.

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"Officials from both sides must use the S&ED not only to candidly discuss the trends and consequences in the overall U.S.-China relationship but also to evaluate the views, concerns, recommendations and intentions of their counterparts," he added.

China's growing military clout and assertiveness - particularly with regard to territorial claims in the East and South China Sea – where Japan and several other Southeast Asians have overlapping claims, has the U.S. on edge.

China lays claim to Japanese-administered islets in the East China Sea, known as Senkaku in Japanese and Diaoyu in Chinese. It also claims the South China Sea nearly in its entirety, rejecting rival claims from Vietnam, the Philippines, Taiwan, Malaysia and Brunei.

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"From an American perspective, it's getting harder and harder to separate China's relations with its neighbors. As China's relations with Japan and others have deteriorated that inevitably bleeds into the U.S.-China relationship," said Evan Feigenbaum, vice chairman of Paulson Institute – a think a U.S.-based think tank.

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The S&ED provides the single best opportunity to arrest the current escalation of mutual suspicions before a likely meeting between U.S. President Barack Obama and Chinese President Xi Jinping when Beijing hosts the APEC Leaders Meeting in November, Brooking Institution's Lieberthal added.

Economic ties

As the U.S. and China work out the "strategic" side of their relationship, it's pivotal that the U.S. and China thicken the economic part of their relationship, say experts.

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One avenue for deepening economic ties is the U.S.-China Bilateral Investment Treaty (BIT), which is high on the agenda at the talks.

President Xi Jinping on Wednesday said the two countries should speed up talks on the BIT, which seeks to clarify the rules for investment between the two countries while removing many barriers that remain to such investments.

Todate, there have been 12 rounds of BIT negotiations with the most recent in early March in Washington, according to the U.S.-China Business Council.

At last year's S&ED, the U.S. and China announced a breakthrough in ongoing BIT negotiations, in which China would provide market access and other forms of protection for foreign investors in all sectors of its economy except those specifically enumerated on a "negative list."

The U.S. has been pushing for such a deal as American firms have been keen to get greater access to the mainland market amid burgeoning consumer demand there.