China and the United States were able to agree on thorny trade issues and stricter enforcement of sanctions on North Korea during high-level talks in Beijing, but the world's two biggest economies failed to make progress on resolving rising tensions in the South China Sea.
Much of the focus at the annual Strategic and Economic Dialogue, a two-day meeting of Cabinet-level foreign affairs, trade and other officials, was on economic issues, such as making China’s yuan currency more international, but tensions in the South China Sea cast a long shadow.
"We didn't agree on everything," said US secretary of state John Kerry, who described the US-China relationship "absolutely vital".
"It may well be the most consequential bilateral relationship of nations in the world," he said after talks in the Zhongnanhai leadership compound beside the Forbidden City in the heart of Beijing
The South China Sea is a tense geopolitical hotspot, as China steps up its claim to most of a region through which about €4.5 trillion in maritime trade passes every year and beneath which lie massive oil and gas reserves.
China’s hackles have been raised by a series of US military patrols close to territories that China calls its own.
The Philippines, Vietnam, Malaysia, Taiwan and Brunei all have competing claims, and are all close allies of the US. Washington says its patrols in the region are to safeguard freedom of navigation and overflight.
Tensions are expected to come to a head soon, because the Permanent Court of Arbitration in The Hague is set to rule soon on a unilateral arbitration case submitted by the Philippines on its territorial disputes with Beijing in the region.
State councillor Yang Jiechi, China's top diplomat, said Beijing was within its rights to safeguard its territory and while he agreed on the need for negotiation, he urged Washington to stay out of any disputes.
"China hopes the US will scrupulously abide by its promise to not take sides in relevant territorial disputes and play a constructive role in safeguarding peace and stability in the South China Sea," Mr Yang said.
Mr Kerry responded in restrained fashion.
“We reiterated America’s fundamental support for negotiations and a peaceful resolution based on the rule of law as well as our concern about any unilateral steps by any party . . . to alter the status quo,” he said.
On trade issues, the US and the European Union believes China is selling products too cheaply overseas, which hurts foreign competitors and threatens jobs.
After the talks, China promised to rein in steel output that is flooding global markets and also agreed to work with the US in enforcing sanctions against North Korea, imposed after it pushed ahead with nuclear tests in the face of international censure.
Mr Kerry also raised the matter of human rights, expressing concern about China’s recent crackdown on lawyers and religious activists. He believed that a controversial new law which puts foreign non-government organisations (NGOs) under police supervision would be applied in a fair way.
In the run-up to the talks, Chinese president Xi Jinping had struck a conciliatory tone.
"It's not scary to have disagreements," Mr Xi said. "The key is not to use disagreements as an excuse for confrontation. Some disputes may not be solved in a short time. Both sides should put themselves in each others' shoes and manage them in a pragmatic and constructive way." – (Additional reporting: agencies)
