By Michael Martina, David Brunnstrom and Gabriel Crossley
WASHINGTON/BEIJING (Reuters) - U.S. President Joe Biden and Chinese leader Xi Jinping spoke for 90 minutes on Thursday, in their first talks in seven months, discussing the need to ensure that competition between the world's two largest economies does not veer into conflict.
The U.S. side said the "proof will be in the pudding" as to whether the stalemate can be broken with ties between the superpowers languishing at their lowest point in decades.
In a statement, the White House said Biden and Xi had "a broad, strategic discussion," including areas where interests and values converge and diverge. The conversation focused on economic issues, climate change and COVID-19, a senior U.S. official told reporters.
"President Biden underscored the United States' enduring interest in peace, stability, and prosperity in the Indo-Pacific and the world and the two leaders discussed the responsibility of both nations to ensure competition does not veer into conflict," the White House added.
Occasional high-level meetings since Xi and Biden's first call in February have yielded scant progress on issues ranging from human rights to transparency over the origins of COVID-19.
In the months since, the two sides have lashed out at each other almost constantly, often with vitriolic public attacks, sanctions on officials and criticism over not upholding international obligations.
Chinese state media said Xi had told Biden that U.S. policy on China imposed "serious difficulties" on relations, but added that both sides agreed to maintain frequent contact and ask working-level teams to step up communications.
"China and the United States should ... show strategic courage and insight, and political boldness, and push Sino-U.S. relations back to the right track of stable development as soon as possible," state media said, citing Xi.
Asian currencies and share markets strengthened, as investors speculated that the call could bring a thaw in ties between the two most important trading partners of regional economies.
Xi said that if "core concerns" on both sides were respected, diplomatic breakthroughs could still be made in the area of climate change, adding that the issue could add "positive factors" to the relationship.
During a visit to China by Biden's top climate envoy John Kerry last week, senior diplomat Wang Yi said climate change was an "oasis" in China-U.S. relations but it could not be separated from broader disputes.
'PROOF WILL BE IN THE PUDDING'
The Biden administration, preoccupied by a chaotic U.S. withdrawal from Afghanistan, has signaled that ending America's longest war will give U.S. political and military leaders the space to tackle more pressing threats from China's rapid rise.
But Beijing has been quick to seize on the U.S. failure in Afghanistan to try to portray the United States as a fickle partner.
Last month, China's Foreign Minister Wang Yi said Washington should not expect China's cooperation on that or other issues if it was also trying to "contain and suppress" China.
The senior U.S. administration official told reporters before the call that Washington had been disappointed that Chinese officials appeared only willing to read talking points during recent high-level talks.
The official added that the U.S. side saw the leaders' call as a test of whether direct engagement with Xi could end what had become a stalemate in ties.
"This is about seeing if there is an ability to engage more substantively than we've been able to ... the proof will be in the pudding," the official said after the call, describing the tone as candid, but respectful.
But the official also acknowledged that the United States' ability to change China's behavior may be limited, and that Washington must largely focus on shoring up competitiveness and rallying partners and allies.
Successive U.S. administrations have complained that Beijing has sought to use endless dialogue as a delaying tactic, frustration with which ultimately led Washington to end an annual U.S.-China dialogue mechanism.
Even so, the official said Biden had not planned to raise the prospect of U.S. retaliatory action or "costs" if China refused to co-operate on a range of issues, including investigations into the origin of COVID-19.
Beijing denies the U.S. accusation that it has not co-operated with the pandemic source investigation.
The U.S. official said it would require a "training period" for the Biden administration to convince Chinese leaders, who are preparing for an important Communist Party congress next year, that Beijing's stance would not pay dividends.
"We also think that essentially Beijing's actions are quieter than their words," the official said. "Their responses to our actions have actually been largely symbolic and frankly their hard line rhetoric isn't really working."