U.S. and Chinese officials agreed to give the yuan a foothold inAmerica while sparring over how to address excess capacity inChina's steel and aluminum industries, illustrating both theprogress being made and hurdles that remain in the nations'economic relationship.

Finishing two days of annual bilateral talks in Beijing onTuesday, China said it will let foreign institutions raise 250billion yuan (US$38 billion) in the U.S. to be invested in Chinesemarkets. China will also allow an American bank, which wasn'tidentified, to clear yuan transactions outside of the mainland,with U.S. Treasury Secretary Jacob J. Lew saying participation inthe yuan market opens an “important door.”

At the same time, progress was mixed on U.S. efforts to getChina to reduce overcapacity that America complains isdistorting global markets. Lew said there was a “good agreement” onsteel and the outcome from the capacity talks was “quite strong,”with China restating commitments and agreeing to let market forcesdetermine which facilities are creating excess production. Heexpressed disappointment on a lack of a similar conclusion onaluminum.