The Trump administration’s economic team held their first day of key talks in Beijing on Thursday, without giving any sense of progress on a deal to stop an escalation of trade barriers.

Treasury Secretary Steven Mnuchin, who is leading the delegation, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow declined to comment to reporters on arrival at their hotel after meetings and a dinner with their Chinese counterparts. Talks are expected to resume on Friday.

The U.S. has tempered expectations of a major breakthrough from the discussions, which are expected to focus on U.S. concerns over China’s state-driven economy, forced technology transfers and America’s widening trade deficit with the world’s No. 2 economy. Underscoring the friction, a U.S. report released Thursday showed the trade gap with China surged by 16 percent to more than $91 billion in the first quarter of this year.

China’s government won’t accept any U.S. preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100 billion, a senior government official, who asked not to be named, said late Wednesday.

Few Details

No details of any planned press conferences have been given by either side, and analysts aren’t optimistic about potential outcomes beyond possibly delaying the threatened imposition of tit-for-tat tariffs. China’s largest media outlets have been ordered to refrain from reporting any material beyond official press releases related to the talks, according to people familiar with the matter.

“Our expectations are low. The U.S. negotiating position is unclear—indeed it’s not even clear if the U.S. representatives have a unified view on what they want to achieve,” according to Tom Orlik, chief economist at Bloomberg Economics. “The Chinese side has already made concessions and won’t rush to make more. The past few weeks have shown that markets can be roiled by tariff chatter, so that’s certainly a possibility in the next couple of days.”

The meetings are an opportunity for the sides to exchange their views after the official channel for U.S.-China high-level economic talks was suspended last year.

President Donald Trump has threatened to impose tariffs on as much as $150 billion of Chinese goods to punish China over its IP practices if the talks fail to yield progress, a move that China said would spark retaliation in equal measure on American exports. The U.S. is also looking at ways to crack down on Chinese investment in the U.S. in an effort to balance the scales and protect sensitive technology.

Trump sounded a more positive note as his economic team entered the talks in Beijing. “Our great financial team is in China trying to negotiate a level playing field on trade!,” Trump tweeted as his team arrived in Beijing. “I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!”

Equal Footing

China’s official Xinhua News Agency said in a commentary Wednesday that the U.S. should show sincerity in trade talks instead of making unreasonable demands. China will take retaliatory steps of the same intensity if the U.S. puts tariffs on its goods after the talks, Xinhua said.

The discussions should involve equal-footed consultation and mutual respect, and work toward mutual benefits, a Chinese foreign ministry spokeswoman told reporters in a regular briefing on Thursday. Chinese Vice Premier Liu He, the top economic adviser to President Xi Jinping, is leading his nation’s delegation.

Another irritant in the relationship is a U.S. ban on sales of crucial American technology to telecommunications-gear maker ZTE Corp. and a probe it is said to be leading against Huawei Technologies Co., China’s largest mobile and telecommunications company.

Xi said Wednesday that China must firmly control major technologies and rely on domestic innovation, echoing comments from days earlier when he used a visit to a semiconductor company in Wuhan to say the industry must make major breakthroughs.