BEIJING—A U.S. delegation led by Treasury Secretary Steven Mnuchin arrives here on Thursday with a list of asks for President Xi Jinping: reduce China’s trade surplus with the U.S., better protect intellectual property, and end policies Washington says favor large Chinese companies and discriminate against American businesses.

Mr. Xi may be China’s most powerful leader in decades, but he faces a test of that strength as he tries to advance the nation’s economy and avert a trade war with the U.S.

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