China reiterated on Friday that it is not deliberately seeking a trade surplus with the United States, Chinese Vice Finance Minister Zhu Guangyao said, days before talks with the United States.

China's position is clear -- that we are not deliberately pursuing a large trade surplus, Zhu told a news briefing ahead of the annual Strategic and Economic Dialogue in Washington D.C. from Monday. This is a mutually beneficial, win-win economic relationship.

Zhu also said the two sides agree on the general direction for yuan reform but have differences over the rate of reform and said there was a need to enhance further understanding. He reiterated China's position that the exchange rate issue was a matter of China's own sovereignty.

Zhu added that managing China's growing foreign exchange holdings was challenging.

A key cause of trade friction between Beijing and Washington is the U.S. trade deficit with China. Despite a pledge by both countries to work together on overcoming global imbalances, the U.S. trade deficit with China in 2010 rose to $273.1 billion, a 20.4 percent increase in the shortfall in 2009.

(Reporting by Chris Buckley; Editing by Ken Wills)