The world's two biggest economies will tackle areas of tensions in the annual discussions, this year in Washington, but observers expect no major breakthrough.

"This round, we fear, is going to be a tough one," said Carl Weinberg, chief economist at High Frequency Economics.

With both sides still far apart on key economic issues, he said, "prospects for love and happiness to emerge from these talks is very low."

Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner will lead the US team in the third annual US-China Strategic and Economic Dialogue.

They will be meeting with two of the highest-ranking officials in the Chinese government: Vice Premier Wang Qishan and State Councilor Dai Bingguo.

For the first time, top military representatives from both sides will attend.

Senior US officials last week said they would raise concerns with Beijing about its human rights record both generally and by seeking answers on specific cases, and about the undervalued Chinese currency, the yuan.

But high-level Chinese officials, while acknowledging they were willing to discuss both issues, set the stage for two days of contentious talks by outlining the stark differences between the two sides.

On human rights, Chinese Vice Foreign Minister Cui Tiankai told reporters that Beijing was "willing to have an exchange of views with the US and have dialogue with them on the basis of equality and mutual respect."

But he added: "I think it is advisable for the United States to pay more attention to the development of China in terms of human rights, rather than being preoccupied with individual cases".

Beijing has launched its toughest crackdown on dissent in years, with scores of activists and rights lawyers rounded up, including high-profile artist Ai Weiwei, who has been in police custody for more than a month.

Geithner will press China again to allow the yuan to appreciate, a politically sensitive issue that has long haunted talks.

The Treasury Department has delayed until after the meeting the publication of its next semi-annual currency manipulation report to Congress, which could lead to sanctions against Beijing.

On the yuan, Vice Finance Minister Zhu Guangyao said the two sides agreed on the direction of reform, but not on the pace of appreciation, with Washington putting too much emphasis on the latter.

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