The United States reprimanded China for not handing over fugitive leaker Edward Snowden, but the two powers saw progress elsewhere in ties including on reaching an investment treaty.
US Deputy Secretary of State William J. Burns (lower R) and other officials meet with Chinese counterparts at the US Department of State in Washington, DC, on July 11, 2013.
In wide-ranging annual talks seen as important by Beijing, the United States on Thursday openly criticized China for not extraditing Snowden -- a former contractor who unveiled details of pervasive US online snooping -- after he fled to Hong Kong.
President Barack Obama, in a statement on a meeting with the Chinese envoys, voiced "disappointment and concern" that Snowden was allowed to leave Hong Kong on June 23 for Russia, where he remains in limbo as he seeks asylum.
Deputy Secretary of State William Burns said the decision on Snowden "undermined" calls for cooperation between Obama and China's new President Xi Jinping when they spent a weekend at the Sunnylands resort in California.
"We have made clear that China's handling of this case was not consistent with the spirit of Sunnylands or with the type of relationship -- the new model -- that we both seek to build," said Burns, who was filling in for Secretary of State John Kerry, whose wife is ill.
State Councilor Yang Jiechi, speaking at a joint press event, said Hong Kong enjoyed autonomy and the special administrative region's decisions were based on its laws and "beyond reproach."
The Snowden saga was the latest cloud over relations between the Pacific powers. The United States also took China to task for what it charges is a vast hacking operation that has severely hurt US companies by stealing secrets.
Amid charges by Snowden that US spies have penetrated Beijing's Internet network, Yang responded that China was itself a victim of hacking. He urged international rules set by the UN "to help uphold cyber security in all countries."
But the talks, known as the Strategic and Economic Dialogue, have generally been dominated by broader economic issues -- and both sides spoke optimistically on momentum between the world's largest developed and developing nations.
US Treasury Secretary Jacob Lew said China agreed for the first time to put all areas on the table on a treaty to govern investments. He said the step would "level the playing field" for US businesses seeking to enter the billion-plus market.
"The commitment made today stands to be a significant breakthrough and marks the first time China has agreed to negotiate a bilateral investment treaty, to include all sectors and stages of investment, with another country," Lew said.
The United States and China first started talks on a treaty in 2008, and the two sides did not give any timeframe for the conclusion of negotiations.
A treaty would require approval by a forbidding two-thirds of the US Senate, but both countries see incentives for the effort.
The United States often complains of Chinese restrictions on foreign investors, while China has been alarmed by repeated US efforts to limit investment in sectors Washington sees as critical to national security.
Telecoms giant Huawei recently became the latest Chinese firm to lose hope over the US market after a congressional report charged its equipment could be used for spying.
"The United States pledges to treat Chinese investment equally and fairly," Vice Premier Wang Yang said at the close of the talks.
In another frequent source of friction, the United States said it raised concerns over China's human rights record, including its treatment of minorities.
"We firmly believe that respect for universal rights and fundamental freedoms will make China more peaceful, more prosperous and ultimately more secure," Burns said.
Yang replied that the United States should improve its own human rights record and show "mutual respect" for other countries' internal affairs.
"People in various regions in China including Xinjiang and Tibet are enjoying happier lives, and they are enjoying unprecedented freedoms," Yang said.
More than 110 Tibetans have set themselves on fire since 2009 to protest what they see as stifling rule, while the Xinjiang region has seen frequent strife as members of the mostly Muslim Uighur community allege repression.
Obama also pressed China on its tense maritime disputes with Japan, the Philippines and Vietnam, saying that the United States would not accept "coercion or intimidation."