“There is growing skepticism in each country about the other’s intentions,” Paulson said at the start of two days of closed door talks with a Chinese delegation led by Vice Premier Wu Yi that includes 15 Cabinet-level officials from Beijing.

“Unfortunately, in America this is manifesting itself as anti-China sentiment as China becomes a symbol of the real and imagined downside of global competition.”

In opening remarks responding to Paulson, Wu said politicizing differences over trade issues would only make matters worse — a shot across the bows of U.S. legislators who are threatening measures to restrict Chinese imports unless China’s yuan currency appreciates.

“We’re willing to take effective measures together with the U.S. side to address bilateral trade imbalances,” Wu said, adding: “These measures include increasing imports from the United States by China and enlarging exports to China.”

Wu, a skilled trade negotiator, said “confrontation does no good at all to problem solving, and pressure ... can only make the situation more complex.”

The U.S.-China talks are taking place under the umbrella of a strategic economic dialogue” initiated with an opening round in Beijing in December that aims to smooth long-term relations and handle immediate irritants.

Paulson said “open, honest” U.S.-China economic relations were “pivotal to the future of the global economy.”

The United States has the world’s largest economy while China, an emerging-market country with a managed currency, has surged into fourth-largest with export-fueled growth.

The top item on the U.S. agenda over the next three days will be to let Wu and her companions know that the White House is losing its ability to hold off congressional ire at a U.S. trade gap with China that hit a record US$233 billion last year.

Earlier in Beijing, an official spokeswoman said Wu would lobby Congress on the benefits of close trade relations.

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