Next week's top-level dialogue between China and the United States will set the tone for smoother bilateral relations with candid reflections on past problems as well as discussions on those looming on the horizon, said observers.

The talks follow a series of difficult situations between the two nations, including a $6.4-billion arms sale package to Taiwan, Obama's meeting with the Dalai Lama and Google's departure from the mainland.

"The significance of the dialogue is that the two countries can enhance mutual understanding and strategic trust, which is conducive to smooth discussions if there are more frictions in the future," said Tao Wenzhao, an expert on US studies at the Chinese Academy of Social Sciences.

An escalating situation on the Korean Pennisula and the European debt crisis will be among the top topics discussed at the talks between China and the United States next week, said senior officials from both sides.

The Second China-US Strategic and Economic Dialogue - the highest-level forum between the two countries - will bring together 50 representatives from more than 40 departments of both countries, Chinese Vice-Foreign Minister Cui Tiankai said on Thursday.

Cui said the dialogue would also include energy security, climate change, UN peacekeeping and anti-terrorism.

Regional issues including the sinking of a Republic of Korea warship, the Iran nuclear issue and the frequent intervention of US ships into China's Exclusive Economic Zone will be among the remaining topics, according to diplomatic sources.

The dialogue, taking place May 24 and 25, will be co-chaired by Chinese Vice-Premier Wang Qishan and State Councilor Dai Bingguo, along with US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner.