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A Rocky Time In U.S.-China Relations As Leaders Meet In Beijing

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China's President Xi Jinping (right), chats with U.S. Secretary of State John Kerry (center), and U.S. Treasury Secretary Jacob Lew during the joint opening ceremony of the U.S.-China Strategic and Economic Dialogues in Beijing on Monday.

The U.S. and China are the two largest economies in the world — and interdependent in a host of ways. But as leaders from both countries start annual high-level talks in Beijing, disagreements over how China does business are creating some trust issues in the relationship.

"You might want to think of the US China relationship as kind of like an arranged marriage," says Arthur Loeber, a Beijing-based economist and author of China's Economy: What You Need to Know.

"They're not in it because they fell in with each other, they're in it because forces beyond them made it happen and now they're stuck with each other and now they have to deal with it," Loeber says.

One way of 'dealing with it' is through annual talks like the Strategic and Economic Dialogue, which got under way in Beijing on Monday. Chinese president Xi Jinping kicked off the event with a call for more mutual trust. On the relationship with America, he quoted a Song Dynasty Chinese poet who said, "Rivers always take meandering paths before reaching their destination."

For the U.S. side, Secretary of State John Kerry is handling security conversations, while U.S. Treasury Secretary Jacob Lew leads the economic track.

"Having grown to be one of the two largest economies in the world it's increasingly important for China to accept the responsibilities of being a large and powerful economy," Lew said.

U.S. Firms Want More Access

American companies want more unfettered access to Chinese markets and its hundreds of millions of consumers. But China's first priority is its own domestic economy and homegrown firms. It's led to new rules and restrictions making it tougher for non-Chinese companies to compete. Especially on the tech front.

"Frankly the way the rules have been written appear to exclude American companies from being able to provide technology," said Erin Ennis, senior vice president of the U.S. China Business Council.

"Bringing more competition to the market actually makes companies do a better job," she says.

Then there's the issue of overcapacity. To prop up its own economy, China is keeping open dozens of industrial plants that pump out raw materials like steel and aluminum, stuff the world already has enough of.

"It's distorting their markets, it's an impediment to medium and long-term growth. And it's distorting global markets," said Lew.

At the talks, the U.S. is encouraging China to let global markets act with less state intervention. But the Chinese have their own domestic pressures to worry about.

"It's not the best time for us," says Yienching Yang, of China's E-Cai Economic Research Institute. "Because we don't have very good economic growth. And we don't have a very good political environment in the United States."

U.S. Politics

The American political environment is a question, as anti-China sentiments get a voice in Republican Presidential Nominee Donald Trump.

"We've got enough problems in our country. We have to rebuild our country. China and other countries have committed the greatest theft in the history of the United States," Trump said, while campaigning in New Hampshire last August.

Echoing his Chinese counterparts, Lew says ongoing communication is far more effective than confrontation.

"The U.S. China economic relationship is the most important economic relationship in the world," Lew said.

Shared interests are keeping the lines of communication going, even if no specific outcomes are expected in this set of dialogues. And outcomes aren't the point, Loeber says, of the dialogues. Just working through the tough stuff can considered progress.

"It's a lot like marriage counseling," Loeber says.

Relationship status? It's complicated.

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