WASHINGTON -- China and the United States began a key economic dialogue on Tuesday in Washington, aiming to address outstanding issues in bilateral economic and trade relations.

Opening the discussions in an ornate government auditorium decked out with flags from both nations, Paulson called the event historic because of the number of Cabinet officials from both sides who were participating.

"Never before have so many ministers from China gathered in one place in the United States. ... We both realize how critical it is for our countries that we get our long-term economic relationship right," Paulson said.

He said it was important for the two countries to work towad "near-term agreements that build confidence on both sides."

Chinese officials, meanwhile, appealed to the administration to help ease growing trade tensions.

China hopes the two sides can "effectively solve the frictions and problems cropping up ... so as to ensure steady and smooth development of relations between the two nations," Foreign Ministry spokesman Jiang Yu said in Beijing.

The Chinese are expected to announce that they are cutting tariffs on the imports of energy services and technologies, which would boost the market for US products. The Chinese are also expected to increase the stake US and other foreign companies can own in Chinese banks. That ownership level is currently capped at 25 percent.

The administration also hopes to reach a deal expanding opportunities for US airlines in China.

Among the officials participating in the talks are Health and Human Services Secretary Michael Leavitt and Agriculture Secretary Mike Johanns whose agencies are dealing with issues of food safety from Chinese imports.

Paulson was leading a US delegation that includes top officials from 11 Cabinet-level agencies and Federal Reserve Chairman Ben Bernanke. Chinese Vice Premier Wu Yi's team includes 14 Cabinet-level ministers.

A similar collection of high-powered talent assembled for the first session of the strategic dialogue held last December in Beijing. Under an agreement announced last fall, the two countries plan to meet twice a year to discuss a wide range of economic issues.

The two sides were scheduled to dine Tuesday night at the State Department, and the Chinese delegation was scheduled to meet with President George W. Bush during the visit and to have closed-door talks with key members of Congress.