President Barack Obama has previously said that the US needs to make a decision on labelling China a "currency manipulator". Such a statement is not what has come to be expected by China and has been deemed entirely unacceptable. When officials from both sides meet in Beijing today for the latest round of the Strategic and Economic Dialogue, they will certainly have plenty to talk about.
US policymakers say they seek a positive relationship. They believe that disputes and collaboration can be compartmentalised. But, with the economic crisis, confrontation on some issues and co-operation on others cannot be kept apart. Nothing is trivial because negative statements, incidents and trends affect public opinion and policymaking in both nations.
Both sides had established a relatively sound base for co-operation in managing the world financial crisis, but then the US implemented tariffs on steel, tyres and other goods made in China, introduced anti-dumping, anti-subsidy and special protectionist tariffs, and launched six investigations into alleged unfair practices in export trade. A 53 per cent increase in the number of disputes involved $7.6bn of Chinese exports.
Mr Obama has pledged to double US exports to raise competitiveness and stimulate America's economy. But to increase exports to China, the US needs to remove policies that restrict trade and propose ones that benefit both nations.
Currently, China and the US are each other's second-largest trading partners. Both have suffered from shrinking exports, but bilateral trade has fared relatively well. However, attempts by Chinese companies to strengthen US-China trade are often blocked by the US government and narrowly focused interest groups. US policymakers need to protect what is of mutual interest instead of getting entangled in trade disputes and politicising economic disputes for short-term benefits.
America is used to having it all its own way. In 1972, as the US opened diplomatic relations with China, it abandoned pegging the dollar to gold. That enabled it - through its monopoly on printing US dollars - to create huge trade and investment advantages. Its economy grew strongly as it managed the value of its currency at the expense of other nations.
Washington has not always fully acknowledged that from 2000, the year China joined the World Trade Organisation, to 2008 the US dollar declined against many currencies, while from 2005 to 2008 Beijing gradually increased the US dollar exchange rate of the renminbi by 21 per cent.
The US stimulus plan increased America's debt and deficits and will decrease the value of the dollar. China increased its holding of dollars as America's other trading partners reduced theirs. As the US financial crisis loomed, China pegged the renminbi to increase stability and exert a positive influence on its economic recovery. It will keep a relatively stable renminbi exchange rate to ensure its economic growth is steady rather than uncontrollable, which would harm all nations. Currently, China is providing stability as the largest holder of US government debt and US dollar-denominated reserves.
China-US relations changed when the world learnt that America's financial system would collapse unless the government saved insolvent US-based global banks, insurance companies and carmakers. The bail-out turned the US government into the largest shareholder of formerly privately-owned companies, subsidising their commercial failure. Laisser faire theories, which US policymakers still demand that China adopt, were suddenly replaced by massive US government control of market forces.
The US often pursues policies that are "win-win" for itself alone. Its policy-makers would undermine China's vital national security and economic interests while seeking China's help in protecting America's vital interests. But the reality is that the policies America proposed are implementable and sustainable only if they are beneficial also for China. The Strategic and Economic Dialogue should focus on new US policies instead of trying to change China's policies, which are essential for global economic recovery. Huo Jianguo is president, Chinese Academy of International Trade and Economic Co-operation, a subsidiary of China's Ministry of Commerce. John Milligan-Whyte is chairman, the Center for America-China Partnership