US, China dampen expectations as trade talks open
Steve Mnuchin appears on Fox News (screen grab)

Top US and Chinese officials kicked off crucial trade talks Thursday in Beijing but both sides sought to dampen expectations for a quick resolution to a heated dispute between the world's two largest economies.

The gathering comes months after US President Donald Trump sparked a series of tit-for-tat exchanges by threatening to impose huge tariffs on billions of dollars worth of goods, sparking fears of a potentially damaging trade war.

"It is not realistic to resolve all issues through only one round of negotiations" Hua Chunying, a spokeswoman for China's foreign ministry, told a regular news briefing Wednesday.

The "discussions and negotiations should be based on the basis of equality and mutual respect, and the outcome mutually beneficial and win-win. Let's wait and see," she said Thursday, announcing that the talks had begun.

The US delegation includes Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, US Trade Representative Robert Lighthizer, White House economic advisers Peter Navarro, Larry Kudlow, Everett Eissenstat and ambassador Terry Branstad.

Most of the team gathered at a hotel in central Beijing Thursday before heading to the US embassy and on to talks at China's state guest house.

While walking to their motorcade the American officials smiled and ignored reporters who shouted questions. Kudlow flashed a thumbs up.

Each member of the team is known to harbour strong views with varying degrees of hawkishness on the dispute -- from Navarro, author of "Death by China", to Mnuchin, a former Goldman Sachs executive who has publicly expressed optimism on resolving the spat.

"I'm always hoping but not always hopeful," Lighthizer said on Tuesday before departing for Beijing. "It's a big, big challenge."

Trump is watching and tweeting from Washington.

"Our great financial team is in China trying to negotiate a level playing field on trade!" he tweeted as his trade delegation prepped in the Beijing hotel.

"I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!"

Xi Jinping's top economic advisor Vice Premier Liu He is leading the talks for China.

Liu's visit to Washington earlier this year for trade talks produced few tangible results.

- Concialiatory moves -

As the trade dispute heated up this spring, China made a series of conciliatory gestures.

Xi gave a speech vowing to cut tariffs in some sectors, drawing a warm response from Trump.

China followed up with a timeline to lift foreign ownership restrictions for automakers and this past weekend announced it would immediately raise limits for some sectors of the financial industry allowing foreign firms to take controlling stakes.

Still Chinese officials have said meeting a Trump demand to reduce the bilateral trade surplus by $100 billion annually was "impossible".

If the talks fail, the US's threatened tariffs on Chinese imports such as electronics, aircraft parts, and medicine could be imposed in late May.

China would likely fire back by implementing its $50 billion list that targets soybeans, cars, frozen beef, whiskey and a slew of other US products.

Markets in the US fell Wednesday as trade worries persisted and Hong Kong dipped into the red Thursday.

- Tech battle -

The immediate threat of tariffs obscures an escalating contest between the two countries over technology.

US officials are concerned about Beijing's "Made in China 2025" industrial policy which they see as a Chinese plan to dominate key high tech industries.

Before boarding a plane for Beijing, Ross called the policy "frightening".

Last month, Washington banned Chinese telecom and smartphone giant ZTE from purchasing crucial US components for seven years -- threatening the company's survival -- as punishment for breaking US export controls.

The US has also reportedly opened a similar probe into another Chinese telecom major, Huawei, after restricting its operations in the country on national security grounds.

Washington's moves, perceived by Beijing as an attempt to contain China's strategic ambitions in hi-tech, have not gone unnoticed.

Xi told scientists last week that the country must develop its own core technology.

"To tackle the next key problems in science and technology, we should abandon fantasies and rely on ourselves," he said.