Jing Ulrich, chairman of China equities at JPMorgan, said the Chinese team would focus on investment this time.

It was accompanied by a delegation from mainland companies seeking expansion in the US, while previous delegations had focused on buying American products.

'Chinese corporations are poised for overseas expansion in search of new markets and natural resources. The SED [strategic economic dialogue] may raise expectations for mergers and acquisitions in the US,' Ms Ulrich said.

Some US companies were in distress as a result of the credit crisis, but the investment review process could complicate overseas companies' acquisition of major assets, she said.

A start to negotiations on a long-term arrangement on mutual investment tops the Chinese side's agenda. Beijing also seeks a change in a recently proposed US regulation that restricts foreign investment, although until recently investment has been one-way as US multinationals have been moving their production lines to the mainland to exploit cheap land and labour costs.

The draft regulations will implement the Foreign Investment and National Security Act of 2007, which calls for expanded reviews by the Treasury-led inter-agency Committee on Foreign Investment in the United States.

'China's policymakers are concerned about the rising protectionism in the US following the failure of CNOOC and Huawei's merger-and-acquisition bids for US assets,' said Jin Canrong , associate dean of the School of International Relations at Renmin University.

Mainland companies have blamed rising protectionism for state-owned oil giant CNOOC's failed US$18.5 billion bid to buy US producer Unocal two years ago.

Telecoms giant Huawei was also rebuffed by the committee this year in its attempt to gain a minority stake in 3Com, which has US government computer security contracts.

While Washington has been pushing Beijing to open up its services markets, Chinese companies have only in the past few years begun expanding overseas.

With US$1.7 trillion in foreign exchange reserves, Beijing believes it is time for companies to expand overseas through direct investment, and mergers and acquisitions.

Increasing investment in the US would not only expand the country's economic muscle it would also help narrow the Sino-US trade imbalance.

In an apparent move to promote mutual investment and open China's services market, the securities regulator announced on Sunday that a licence had been issued for foreign-securities joint ventures - not to a US company but to Credit Suisse Group.

Such a licence was in line with agreements reached in the Sino-US strategic economic dialogue in May last year.