Financial markets have begun the year hanging on the outcome of talks between American and Chinese officials in Beijing.
The talks are going ahead despite tensions over the arrest of a Chinese tech executive in Canada on USA charges related to possible violations of trade sanctions against Iran.
The more intractable issues related to structural reforms to China's industrial policies, as well as enforcement of any pledges, have been raised by officials on both sides, though there is little clarity on details.
This time around, though, the U.S. has sent members of the Office of the U.S. Trade Representative, including Deputy Jeffrey Gerrish, USTR Chief Agricultural Negotiator Gregg Doud, and Ted McKinney, the Under Secretary for Trade and Foreign Agricultural Affairs at the U.S. Department of Agriculture.
Who claims what in the South China Sea?
People familiar with the talks said the world's two largest economies were further apart on Chinese structural reforms that the Trump administration is demanding in order to stop alleged theft and forced transfer of United States technology and on how to hold Beijing to its promises.
Trump and Chinese President Xi Jinping agreed to halt any further tariff increases for 90 days beginning January 1.
Lu Kang, spokesman for China's foreign ministry, said on Monday that Chinese military aircraft and naval vessels were dispatched to identify the United States vessel and warn it to leave the area near the disputed Paracel Islands in the South China Sea, claimed by China.
"The relevant action by the USA vessel violated Chinese laws and relevant global laws, infringed upon China's sovereignty, and undermined peace, security and order of the relevant waters", Lu said. Wilbur Ross, U.S. Trade Representative Robert Ligthhizer, National Economic Council Dir.
Hundreds of billions in levies.
China and the United States have in the past repeatedly traded barbs over what Washington says is Beijing's militarization of the South China Sea by building military installations on artificial islands and reefs.
China called it a violation of its sovereignty which has damaged "peace, safety and order" in the waterway.
Ross said there was a "very good chance" of reaching an agreement, although monitoring compliance would present a challenge.
The trade clash reflects American anxiety about China's rise as a potential competitor in telecommunications and other technology.
Trump raised import duties on Chinese goods in July over longstanding complaints Beijing steals technology or pressures foreign companies to hand it over.
The timing of Monday's foray by the United States naval ship coincided with the commencement of trade talks between the two countries.
Lu said the two countries have agreed to hold "positive and constructive" discussions.
The U.S. economy grew at an annual rate of 3.4 percent in the third quarter, and unemployment is at a five-decade low.
He and Chinese President Xi Jinping agreed December 1 to postpone more tariff hikes on each other's goods for 90 days while they negotiate. They complain China's companies are treated unfairly in national security reviews of proposed corporate acquisitions, though nearly all deals are approved unchanged.