Tariffs and military drills in the South China Sea have lead to rise tensions between US and China.

China and the United States are set to hold high-level talks in Beijing on Monday, in an to attempt to reduce the increasing trade and military tensions between the world's two largest economies.

US Secretary of State Mike Pompeo is scheduled to hold talks with top Chinese leaders and officials in a bid to halt the ongoing trade war in which both countries slapped additional tariffs on billions of dollars of their exports.

Announcing Pompeo's visit, Foreign Ministry spokesperson Hua Chunying last week said that China and the US would exchange views on bilateral ties and regional and international issues of common concern.

US Defence Secretary Jim Mattis too was due to visit but it was cancelled which China said was at the behest of Washington.

The news of cancellation of his visit came after US allegations that Chinese naval ship conducted unsafe manoeuvres near its destroyer Decatur when it passed through the islands off the disputed South China Sea to assert freedom of navigation.

China claims almost all of the South China Sea. Vietnam, Philippines, Malaysia, Brunei and Taiwan have counter claims.

Pompeo's visit was expected to provide an opportunity to both sides to lower the tensions between them. Besides slapping additional tariffs on Chinese exports, US has also imposed sanctions on a Chinese military unit for securing Russian weapon systems like S-400 missiles and Su-35 fighters.

Also, ahead of the visit both the countries had heated exchanges.

US Vice President Mike Pence Thursday accused China of interfering in US internal affairs and elections policies.

Pence said China wants a "different American President" and is using more "proactive and coercive" methods to interfere in America's domestic policies and politics.

China has refuted Pence's allegation terming them as "malicious slander".

Reacting to Pence's allegations, Hua on Friday said, "the relevant speech made unwarranted accusations against China's domestic and foreign policies and slandered China by claiming that China meddles in US internal affairs and elections".

"It is very ridiculous for the US side to stigmatise its normal exchanges and cooperation with China as China interfering in its internal affairs and elections," she said.

Significantly ahead of Pompeo's visit, Chinese Ambassador to Washington Cui Tiankai said China wants to end the trade war with the US, but that the US position keeps changing "so we don't know exactly what the US would want as priorities".

"We are ready to make a deal. We are ready to make some compromise, but it needs the goodwill from both sides," Cui said in an interview on Wednesday with America's National Public Radio, official Chinese media reported on Friday.

"We want to solve it through negotiation and consultation between the two sides. But in order for the negotiation, the consultation to succeed, we do need goodwill and good faith from both sides," Cui said.

"We offered to reduce the trade deficit of the US States, for instance. And we also presented a very good proposal to the US side about the further reform and opening up in China, some of the so-called structural issues," he said.

"We are ready to work on the issues. Then I think more than once we had some tentative agreement between the two working teams. Then just overnight the tentative agreement was rejected and the demand from US changed. So this is very confusing, and this is making things very difficult," he said.