Chinese VP: We must trust each other

WASHINGTON (CNNMoney) -- China's vice president told U.S. business leaders Wednesday that progress is being made in trade and currency issues between the two nations.

Vice President Xi Jinping also said the two nations -- the world's leading economies -- must learn to trust each other in coming years.

"China-U.S. relations are at a new historical starting point at this second decade of the 21st century," Xi said. "We need to make important efforts toward mutual understanding and strategic trust."

Xi defended China's economic policies, citing statistics that show China's trade surplus with the United States is narrowing.

"China has been taking measures to increase imports by the U.S.," said Xi in the Washington speech sponsored by the U.S.-China Business Council.

He also pointed out that China has allowed its currency to rise and that the United States needs to address its economic situation.

In the past, Chinese leaders have criticized Federal Reserve policies that help weaken the dollar and boost U.S. exports abroad, although Xi didn't specifically mention the issue on Wednesday.

But he did say the United States should "stimulate job creation and improve the balance of U.S. international payments."

Xi, who is expected to take over as China's next leader, emphasized the two nations' "interwoven interests" and said they "should reduce misunderstanding and suspicion."

Xi's calls for more trust came a day after Vice President Joseph Biden complained that China has the upper hand when it comes to trade. China has faced accusations of manipulating its currency and keeping the yuan low, which makes Chinese goods cheaper.

"As Americans, we welcome competition," Biden said in a meeting with Xi. "But cooperation, as you and I have spoken, can only be mutually beneficial if the game is fair."

Economists predict China will become the world's largest economy within the next decade, surpassing the U.S. in 2016, after adjusting for exchange rates, according to the International Monetary Fund.

However, some fear China's economic growth is slowing. Some of that was intentional, as the government tried to slow a rapid real estate boom and tame high inflation. But the nation has also weathered an unexpected slowdown in exports, especially to Europe.

China is America's third-largest market for exports, after Canada and Mexico. But U.S. businesses exported a record $104 billion in goods to China last year, nearly double the amount they exported just five years earlier.

Xi also noted renewed U.S. political interest in the Asia Pacific region following a decade of war in Afghanistan and Iraq.

"China welcomes a constructive role by the United States in promoting peace, prosperity and stability in the Asia-Pacific," he said. "At the same time, we hope the United States will respect the interests and concerns of China and other countries in this region."

On sensitive issues such as U.S.-Taiwan relations, the status of Tibet, and China's human rights record, Xi said both countries should "respect each other's core interests and major concerns."

Xi said he hoped the United States would oppose Taiwanese independence and support peaceful cross-strait relations, in addition to also opposing Tibetan independence.

"Given the differences in current national conditions and in historical and cultural backgrounds between China and the United States, it is only natural that we should have some differences on the issue of human rights," Xi said.

China and the United States should continue talking about how to improve upon human rights issues in both countries he said.

After his stop in Washington, Xi will be accompanied by a large delegation to Muscatine, Iowa and then Los Angeles. In both places, he is expected to focus on striking business deals with local companies.

-- CNN's Jamie Crawford and CNNMoney's Annalyn Censky contributed to this report.