By Matt Spetalnick and Chris Buckley
WASHINGTON (Reuters) - President Barack Obama and Chinese Vice President Xi Jinping will hold talks on Tuesday that could help boost the international stature of Beijing's leader-in-waiting while testing Obama's ability to balance thorny U.S.-China diplomacy with election-year pressures.
Taking his biggest step onto the world stage at a time of growing economic and military rivalry between the two nations, Xi will have a chance to show he is capable of steering his country's crucial relationship with Washington.
Chinese officials have carefully choreographed Xi's U.S. visit as a rite of passage in China's once-in-a-decade leadership transition. He is expected to become head of the ruling Communist Party later this year before taking over the presidency in March 2013.
While Obama will treat Xi to Oval Office talks -- an honor usually reserved for the closest allies and partners -- the U.S. president will tread a cautious line in their first meeting.
He will be mindful of the importance of making a smooth start with China's heir apparent but also of the political need to be firm with Beijing as he seeks re-election in November. Republican presidential contenders have accused Obama of being intimidated by China on trade and currency issues.
Xi, 58, arrived in Washington on Monday afternoon and held a get-to-know-you dinner with U.S. foreign policy veterans, including former national security advisers Brent Scowcroft and Zbigniew Brzezinski, and former Secretary of State Madeleine Albright.
Xi is the highest-ranking Chinese official to visit the White House since Obama launched a new U.S. "pivot" toward Asia in November to counterbalance China's increasing assertiveness in the region.
Even as he welcomes Xi, Obama is quietly overhauling U.S. economic policy toward Beijing, looking for new ways to extract results on issues such as market access and currency practices that have bedeviled him and his predecessors.
Like Obama, Xi will not want to come across as a pushover -- in the face of U.S. pressure on trade imbalances, human rights, the violence in Syria and other points of friction. He has to play to a powerful Communist Party apparatus and nationalist sentiment at home.
However, in the build-up to Xi's visit, he and other Chinese officials have played down tensions, citing hopes for improved cooperation as long as Washington heeds Beijing's concerns.
Xi's tour will take him from Washington to a farm in Iowa to Los Angeles as he looks to assuage Americans' worries about China's strength and intentions. He is a Communist Party "princeling" -- the son of a revolutionary leader -- but also fond of small-town America and Hollywood war dramas.
Obama's aides see the visit yielding few, if any, formal agreements. Rather, they expect the leaders to size each other up.
"In Asia, generally, but in China, certainly, relationships matter and high-level relationships particularly matter," Danny Russel, Obama's top China adviser, told reporters.
But Obama may also want to keep Xi somewhat at arm's length. Many Americans blame China's trade and currency policies for job losses in the U.S. manufacturing sector that have hit important election battleground states such as Ohio especially hard.
A full-page newspaper advertisement by the U.S. Business and Industry Council -- headlined "From China, with Love," referring to Tuesday's Valentine's Day holiday -- urged Obama to "back up your tough words with tough action."
A U.S. industry official, speaking on condition he not be identified, said he was pessimistic Xi's visit would yield much progress on issues such as Chinese theft of U.S. trade secrets or forced technology transfer.
"Whether any outcomes on those issues really can be meaningful is an open question," he said.
At an Asia-Pacific summit in Honolulu in November, Obama demanded that China start behaving like a "grown up" economy.
Obama has repeatedly insisted that China allow its currency to rise faster in value, saying it was being kept artificially low, helping its export-led economy, and aides made clear he would press the point with Xi.
Obama, on the eve of his talks with Xi, proposed $26 million in new trade-enforcement funding to make sure China and other countries play by the rules of international trade.
But U.S. leverage over Beijing is limited, not least because China is America's largest foreign creditor.
For his part, Xi took a swipe at Washington's efforts to beef up its military presence in the Pacific to counter China's own build-up.
"At a time when people long for peace, stability and development, to deliberately give prominence to the military security agenda, scale up military deployment and strengthen military alliances is not really what most countries in the region hope to see," he told the Washington Post.
(Additional reporting by Jeff Mason, Stella Dawson, Paul Eckert and Doug Palmer; Editing by Philip Barbara)