The United States and China - the world's two largest economies - are holding their annual high-level dialogue in Washington this week.

The 7th Strategic and Economic Dialogue is led by US Secretary of State John Kerry and Treasury Secretary Jacob Lew, and China's State Councillor Yang Jiechi and Vice- Premier Wang Yang.

It is taking place amid tensions over several issues, including Washington's attempts to complete an Asia-Pacific trade pact that excludes Beijing, cybertheft of US government workers' data which US officials say originated in China, and territorial disputes in South China Sea.

Here's a quick look at some of the issues expected to be discussed:

US-China summit

This year's dialogue is meant largely to prepare for the Washington summit in September between US President Barack Obama and Chinese President Xi Jinping. It will be Mr Xi's first state visit to the United States since he took over the presidency in 2013.

China would want the Washington conference to go smoothly ahead of Mr Xi's visit, said Shi Yinhong, a professor of international relations at Renmin University and an adviser to the Chinese government. But the tensions on various issues "are not helpful in that regard," said Mr Chas Freeman, a former diplomat who served as the principal translator for President Richard Nixon's 1972 visit to China.

Even so, if the official gatherings don't yield much progress, they provide a venue to air disagreements and slow a slide into outright acrimony, said James Keith, a former US ambassador to Malaysia. "What they're doing is ensuring that very difficult issues don't get worse," Mr Keith said. "That's not to say there aren't some affirmative issues on the agenda, it's just that it will take a while to work through those."

Cybersecurity

The US will address the issue of cybersecurity "in very direct terms" following massive attacks on government computers that US officials have blamed on Chinese hackers, said an unnamed senior US official. The US administration has not openly accused Beijing of hacking into some 14 million employee records of the Office of Personnel Management, but the massive data breach is under investigation by the FBI. A US goal will be to underscore the implications of hacking attempts with both military and economic officials, who may have different perspectives on the issue, said sources. Chinese officials have insisted they have consistently opposed and cracked down on hacking, including any theft of commercial secrets. A bilateral cyber working group was suspended by Beijing last year after Washington indicted five Chinese military officers for hacking into US computers to pilfer US government secrets.

Trade Barriers

China is seeking progress on a bilateral investment treaty, with Vice-Premier Wang Yang advocating for the deal in a commentary published in the Wall Street Journal.

"Many Chinese companies have long been frustrated by the high barriers the US has imposed on investments from China such as stringent security reviews," Mr Wang wrote. "It is through dialogue that some of these concerns have been addressed by Washington. We look forward to more such positive steps."

Earlier this month, the two sides exchanged initial lists of industries to be excluded from any deal.

Maritime row

The US is expected to express its concern over China's aggressive moves in disputed waters in South China Sea. The two countries are at odds over China's claims to much of the South China Sea, despite competing claims from the Philippines, Brunei, Malaysia, Taiwan and Vietnam. China has been taking strong action including building of artificial islands in the area to assert sovereignty. US officials have said the pace and scale of China's reclamation work far outstripped that of other claimants. One official has said that before January 2014, China had only reclaimed about five hectares, but this had soared to 800 hectares, expanding the acreage on outposts it occupies by over four hundred times.

Washington has repeatedly urged Beijing to stop the construction. Such moves are "troubling not just to us, but to the countries in the region," top US diplomat for East Asia, Danny Russel, said: "The prospect of militarising those outposts runs counter to the goal of reducing tensions."

But China issued a White Paper on defence last month, saying that it will project its military power further beyond its borders at sea and more assertively in the air.

Climate Agreement

Environment is an area in which the world's two largest carbon emitters have found a sliver of common ground. The two sides are expected to discuss clean energy and reducing emissions, as well as protecting oceans and the marine environment.

Obama and Xi unveiled a climate agreement in November, aimed at cutting green house gas emissions, after months of behind-the-scenes talks. Ahead of their summit and an international climate meeting in Paris in December, Mr Russel hinted that this is one area where progress might be possible. "This year promises further cooperation on climate," he said.

SOURCES: BLOOMBERG, AFP, REUTERS