President Xi Jinping met with U.S. National Security Adviser Susan Rice last Monday. Xi pointed out that both countries should be able to manage their differences and protect core interests.
Rice's visit to China is to prepare for the visit of U.S. President Obama in September. The trip is for the G20 Summit that will be held in Hangzhou.
A top military official also told Rice that sensitive issues between the two countries must be resolved. Failure to do so might "very likely to disturb and undermine" military relations.
The military official is referring to the decision of the Permanent Court of Arbitration in The Hague on the South China Sea, and rejecting China's territorial claim. The decision was made on July 12.
The independent court stated that China's claim had no historical basis. Four other countries are competing for boundaries in the South China Sea namely Vietnam, the Philippines, Taiwan, Malaysia and Brunei.
However, Rice said that China and the U.S. are willing to have a harmonious working relationship, as proven in the past on the issues on climate change and trade.
"At the same time," Rice said, "we are confronting our differences with candor and clarity and we believe that clarity produces predictability, and predictability produces stability."
Xi reaffirmed Rice and said that both countries will work towards a "bilateral relationship on the basis of no conflict, no confrontation, mutual respect and win-win cooperation."
Rice also met with Fan Changlong, vice-chairman of the Central Military Commission. He told Rice that both countries still faced problems on their bilateral relations.
"We should be honest with ourselves that deep down in this relationship we're still faced with obstacles and challenges," said Fan. He admitted that sensitive matters are affected by complicated factors.
Washington recently deployed naval vessels on the outskirts of the boundaries that are being claimed by China.