The two sides are trying to hammer out a deal ahead of the March 1 deadline when US tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.
Aerial view on the The Spratly Islands, one of the major archipelagos in the South China Sea.
China struck an upbeat note on Monday as trade talks resumed with the United States, but also expressed anger at a U.S. Navy mission through the disputed South China Sea, casting a shadow over the prospect for improved Beijing-Washington ties.
During that operation, a Chinese destroyer came within 41kms of the United States warship, forcing it to manoeuvre to avoid a collision.
The same day the latest talks began, two US warships sailed near islands claimed by China in the disputed South China Sea, a USA official told Reuters.
Pentagon officials said two guided-missile destroyers had travelled within 12 nautical miles of Mischief Reef in the fiercely disputed Spratly Islands.
The goal was "to challenge excessive maritime claims and preserve access to the waterways", as well as to show that the U.S. "will fly, sail, and operate wherever worldwide law allows", Cmdr.
China's foreign ministry issued an angry response.
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We're confident that he will bounce back quickly. "But if we hadn't won this game, we were definitely out of it". Whenever we got into their half we struggled to keep hold of the ball.
Monday's operation was the second in the South China Sea reported by the US Navy this year.
Freedom of navigation operations, or FONOPS, are meant to remind other countries that all nations can operate in worldwide waters.
The two countries have traded barbs over what USA said was Beijing's military installation building on artificial islands and reefs. Other regional nations-such as the Philippines and Vietnam-lay claim to part of the waterway and the USA routinely pushes back against China by sending ships to patrol the sea.
Fears have grown in recent months that the US-China trade dispute is just one element in a bilateral relationship that is fast cooling across the board, with top US administration officials sharply criticising Beijing for everything from human rights abuses to cyber espionage in the US.
It has claimed the U.S. is responsible for ratcheting up war fears in the region by sending warships and military planes close to territory China believes it is entitled to.
China has lashed out at the United States in the wake of another "freedom of navigation" exercise conducted by the U.S. Navy in the South China Sea, accusing Washington of undermining "peace" and "security".
The two countries are also at loggerheads over regional security, with the U.S. offering support to the island nation of Taiwan, which China also claims as its own.