Washington - US Treasury Secretary Henry Paulson Tuesday said the United States and China were making positive strides in their complex economic relationship despite past spats over currencies and trade barriers.

"The relationship is growing in a positive direction," Paulson said in opening a two-day meeting of US-Chinese representatives in Annapolis, Maryland. "By definition, the US-China economic relationship is complex, yet the complexity has not interfered with our ability to build a base of trust."

Paulson said both countries were facing serious growth and inflation challenges at the start of 2008, stemming from the ongoing housing and financial crises in the US as well as surging food and energy prices around the world.

The semi-annual talks are expected to revolve around energy and environmental issues, as the world's two largest polluters grapple with rising energy demands while trying to cut emissions blamed for global warming.

The two countries are expected to sign a 10-year deal on energy cooperation by the end of the Annapolis summit.

"As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases," Paulson said.

"We have a strong and shared interest in avoiding supply disruptions, increasing energy efficiency, promoting the efficiency and transparency of the global energy markets ... and expanding the availability and use of alternative energy sources," he said.

Paulson also said he would push free trade, open economies and more flexible currency markets in the interests of "balanced economic growth."

The currency dispute between China and the US has eased somewhat ahead of the economic talks as China's yuan has continued a steady climb against the dollar over the past couple of years. Past meetings have been dominated by US complaints that the yuan is undervalued. (dpa)