Treasury Secretary Timothy Geithner plans to press Chinese officials to improve the climate for U.S. companies trying to do business in China during a high-level dialogue in Beijing next week.

Mr. Geithner is expected to urge Chinese officials to reverse policies that limit the ability of foreign companies, including U.S. firms, to compete, and to argue that Beijing’s efforts to relax discriminatory rules don’t go far enough, according to U.S. government officials.

“We need to continue to work to make sure that American companies are competing on a level playing field,” Mr. Geithner said during remarks in Seattle Tuesday. “The Chinese government has taken some steps to address these concerns, but we have some more work to do in this area.”

The Chinese have their own concerns about U.S. trade policies, specifically efforts by U.S. industries to block what they view as unfair competition from Chinese imports. According to China’s commerce ministry, in 2009 the U.S. took 23 trade-remedy measures against Chinese goods, 53% more than in the previous year.

U.S. Commerce Secretary Gary Locke said Wednesday that trade frictions between China and the U.S. have been exaggerated, and argued that the punitive measures imposed by both governments affect only a small portion of the trade between the two countries. “Ninety-seven percent of the [Chinese] exports to the U.S. aren’t affected by these duties,” Mr. Locke told reporters in Shanghai.

Another key U.S. goal—persuading China to allow its currency to appreciate—may not dominate discussions as originally expected, due to concerns over Europe’s ability to contain its sovereign-debt crisis. That could anger some U.S. lawmakers who allege that China undervalues the yuan against the U.S. dollar to give its exports a competitive advantage.

Mr. Geithner will be joined by several officials, including Secretary of State Hillary Clinton and Mr. Locke, for the annual U.S. Strategic and Economic Dialogue, to be held May 24 and 25 in Beijing. The meeting is the latest opportunity to address trade and strategic issues that exacerbated bilateral tensions earlier this year.

Last month, Mr. Geithner said he planned to use the dialogue, as well as multilateral discussions in June, to push China toward a more market-oriented exchange rate. He delayed a report to Congress on the currency policies of major trading partners, including China, saying the coming meetings “are the best avenue for advancing U.S. interests at this time.” Now, many observers think the turmoil in Europe could further delay any move by China away from the yuan’s de facto peg to the U.S. dollar.

“If you already were on the margin about revaluing the yuan or taking a chance on shifting the exchange-rate regime, the ongoing events in Europe are hardly going to push you over the line into moving,” said Kenneth Rogoff, an economics professor at Harvard University. “The last thing the Chinese seek is to make their financial markets more volatile.”

For its part, China continues to argue that the U.S. focus on the exchange rate is a distraction from more serious issues. “The U.S. government and elites know that the exchange rate can’t solve America’s imbalances and structural problems,” said Xia Bin, a scholar at the Development Research Center in Beijing who is also an adviser to the Chinese central bank.

Although China’s exports have performed strongly in recent months, Chinese officials worry about the prospect of a slowdown in the European Union, China’s largest export market.

With the euro dropping sharply, the yuan is now up by more than 15% against the European currency this year. That has “created great cost pressures for China’s exporters,” Yao Jian, a Chinese Commerce Ministry spokesman, said Monday.

Mr. Geithner, however, is expected to cite the turmoil in Europe as a reason why China should rebalance its economy—including by appreciating its currency—and begin moving away from its dependence on exports, according to a U.S. government official.

The economic plank of the discussions is likely to be dominated by concerns over trade policies in both countries. In the U.S., many businesses have complained in recent months that protectionist policies in China are threatening their long-term growth in a key market.

Last month, China took steps that appeared to soften rules limiting the access of foreign businesses to a government-procurement market valued at billions of dollars a year. But U.S. Trade Representative Ron Kirk, who will also participate in the dialogue, suggested on Tuesday that Beijing hasn’t done enough.

“We appreciate efforts China’s government has made to address our concern, but we have urged them to refrain from further steps down this path,” he told the U.S. Chamber of Commerce in Washington.

Mr. Geithner said the U.S. shares the concerns of businesses that China’s approach “has the potential to discriminate against foreign-made products and could disadvantage American exporters and investors.”

He said the “challenge is to help make sure that China does more to protect intellectual-property rights and reduces subsidies and other preferences to domestic companies. We want China to give American firms the same opportunities to compete in China that Chinese firms face in the United States.”

By DEBORAH SOLOMON

Tags: businesses, China, china business, commerce department, economy, european union, financial, glo, Global Economy, investors, us economy

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