US and China to hold trade talks
The Chinese delegation includes 16 cabinet ministers
A high-level Chinese delegation has arrived in the US for two days of talks on trade and economic co-operation.
The key Strategic Economic Dialogue meeting comes amid growing tension over trade between the two nations.
So important are these trade talks to China that the country has sent almost half the Chinese cabinet - 16 ministers - to Washington.
It is the second in a series of talks between the world＇s fastest-growing economy and its largest, the US.
Currency issues
There is growing anxiety in the US about its soaring trade deficit with China, which hit a record level of $233bn (£118bn) last year.
Members of Congress are particularly concerned about the exchange rate between the Chinese currency and the US dollar, which they say makes Chinese imports too cheap.
Some US Congressmen say the yuan should be revalued by up to 40%.
Since the Chinese government allowed a limited float of the yuan last year, it has gone up by about 5% against the US dollar.
Last week, the People＇s Bank of China increased the amount that the yuan can appreciate each day from 0.3% to 0.5%.
While that was a useful gesture of goodwill ahead of the talks, many currency traders say that because the central bank sets the rate at which the currency starts each day it will make little practical difference.
Political pressures
The head of the Chinese delegation, Vice-Premier Wu Yi, has warned the US against taking protectionist measures that she said would be irresponsible.
The US has a series of complaints outstanding against China at the World Trade Organisation (WTO).
The WTO will this week begin hearing a case brought by the US, the EU and Canada against Chinese barriers to imports of car parts.
US Treasury Secretary Henry Paulson needs results from this summit as he faces accusations of using too soft an approach to relations with China and that - as a former chairman of Goldman Sachs - he is too concerned with the interests of Wall Street.
He warned that if dialogue failed, China was likely to become the target of protectionist pressures during the US presidential campaign.
"We have to keep making progress because we need some sign posts to show that we are not just talking the talk but walking the walk," he told the China Daily newspaper.
At the same time, the Chinese delegation will not want to give too much away ahead of the five-yearly Communist Party Congress in October.
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