President Xi Jinping has warned of disastrous consequences if China and the United States fail to contain their conflicts.
He also said the process of forming a new type of relationship between the two nations was unprecedented, and some setbacks may occur.
Xi called on both sides to correctly judge the strategic intentions of the other when he set the tone for Sino-US ties at yesterday's opening of the annual Strategic and Economic Dialogue, which was overshadowed by a series of disagreements.
"If we are in confrontation, it would surely spell disaster for both countries and for the world," Xi said as he called on the two sides to break the old pattern of rivalry between an emerging and a developed power.
"How China and the US perceive each other's strategic intentions will have a direct bearing on the policies they adopt and the development of bilateral relations," he said. "One can ill afford a mistake on fundamental issues, a mistake that may possibly ruin the whole undertaking."
US Secretary of State John Kerry and Treasury Secretary Jacob Lew are holding talks with State Councillor Yang Jiechi and Vice-Premier Wang Yang during the two-day dialogue. Topics to be covered include North Korea's nuclear programme, reforms to the yuan's exchange rate mechanism and China's territorial disputes.
Xi said the interests of the two nations were intertwined and steps should be taken towards establishing a "new type of relationship between major countries".
Xi cast a conciliatory tone, saying the Asia-Pacific region was big enough for the two nations' presence and that it was normal for their bilateral ties to sometimes suffer setbacks.
"It is natural that China and the US may have different views, and even frictions, on certain issues," he said.
US President Barack Obama seemed to echo those views when he issued a statement saying the two nations "will not always see eye-to-eye on every issue".
Kerry also sought to address Chinese concerns, saying the US did not seek to contain China.
Shi Yinhong , a US affairs expert at Renmin University, said the remarks by the leaders of both nations indicated that "the path to building constructive strategic ties was more difficult than before" because neither side was willing to accommodate the other's views.
"The US is not convinced about China's strategic intention with China flexing its military muscle in disputed territory," Shi said. "For China, military strength is crucial to being a major power."