China and the United States opened thorny trade talks Wednesday amid rising frustration by Washington over Chinese trade barriers and implied threats by Beijing that U.S. protectionist moves would cut both ways, reported ap. Both sides stressed the countries' growing economic interdependence, but differed on what steps were needed to shrink China's massive trade surplus. The start of the two-day China-U.S. Strategic Economic dialogue follows a similar forum in Beijing on Tuesday that produced wide-ranging agreements on boosting Chinese tourism to the U.S., increasing safeguards over Chinese products and opening up mid-sized Chinese cities to American imports. In opening remarks at a faux imperial palace outside Beijing, U.S. Treasury Secretary Henry Paulson warned that «short-term, politically expedient» protectionist measures would harm prosperity and prospects for working through trade frictions. «The U.S.-China relationship has become central to each nation's interest and to maintaining a stable, secure and prosperous global economic system,» Paulson said. Leading the Chinese delegation, Vice Premier Wu Yi said Beijing had not sought large trade surpluses, and said the U.S. could boost sales to China by relaxing restrictions on high-tech exports. «To address the China-U.S. trade imbalance requires the concerted efforts of both sides,» Wu said. Wu reiterated Chinese concerns about the roughly 50 China-related trade bills introduced this year in Congress, hinting China would likely retaliate if its interests were harmed. «I need to be quite candid about this: If these bills are adopted, they will severely undermine U.S. business ties with China,» Wu said. Washington's trade deficit with China appears set to surpass last year's record US$233 billion (¤159 billion), according to U.S. Commerce Department figures, amplifying calls in Congress for punitive measures on Chinese imports if Beijing fails to loosen its currency regime. Critics claim that Beijing keeps the yuan undervalued, giving Chinese exports an unfair advantage and inflating the nation's trade surplus. China began allowing a slow rise in the yuan's value in July 2005. Since then, it has appreciated 8.9 percent against the dollar in tightly controlled trading. However, Commerce Vice Minister Chen Deming said relying entirely on an appreciation of the yuan to balance out trade with the U.S. was «simply not a scientific approach.» Instead, he said Beijing is more concerned with the impact of the dollar's decline on the world economy. The dollar has fallen sharply against major currencies this year, sinking to a record low against the euro in late November and sliding nearly 7 percent against the Japanese yen, 10 percent versus the Indian rupee and 14 percent against the Canadian dollar. Chen said the decline of the world's reserve currency threatened to push up prices of strategic goods such as gold and oil and impact on the economic health of countries like China that maintain large U.S. dollar-denominated foreign currency reserves. «That's why I sincerely wish to see a scenario where the U.S. economy strengthens and the U.S. dollar strengthens,» said Chen, who is expected to take over shortly as minister. China announced Tuesday that its global trade surplus totaled US$26.28 billion in November, showing strong foreign demand for low-cost Chinese goods despite product recalls and warnings over faulty or tainted Chinese goods ranging from toothpaste and pet food to toys and tires. U.S. Commerce Secretary Carlos Gutierrez, also among American officials attending the talks, said righting the trade imbalance depended on boosting U.S. exports rather than limiting imports from China. However, he appeared to reject Wu's assertions for the need to eliminate restrictions on high-tech goods that were originally imposed to protect key technology secrets and prevent them falling into the hands of China's 2.3 million-member armed forces. «It's a minuscule amount,» Gutierrez said. While China is currently the fastest growing market for U.S. exports, we «clearly need more» market access, he said.