BEIJING (Reuters) – China struck an upbeat note on Monday as trade talks resumed with the United States, but also expressed anger at a U.S. Navy mission through the disputed South China Sea, casting a shadow over the prospect for improved Beijing-Washington ties.

White House senior counselor Kellyanne Conway on Monday also expressed confidence in a possible deal. Asked if the two countries were getting close to a trade agreement, she told Fox News in an interview, “It looks that way, absolutely.”

The United States is expected to keep pressing China on longstanding demands that it reform how it treats American companies’ intellectual property in order to seal a trade deal that could prevent tariffs from rising on Chinese imports.

The latest talks kick off with working level discussions on Monday before high-level discussions later in the week. Negotiations in Washington last month ended without a deal and with the top U.S. negotiator declaring work was needed.

“We, of course, hope, and the people of the world want to see, a good result,” Chinese Foreign Ministry spokeswoman Hua Chunying said at a news briefing in Beijing.

The two sides are trying to hammer out a deal before the March 1 deadline when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.

Trump said last week he did not plan to meet with Chinese President Xi Jinping before that deadline, dampening hopes that a trade pact could be reached quickly. But the White House’s Conway said a meeting was still possible soon.

Escalating tensions between the United States and China have cost both countries billions of dollars and disrupted global trade and business flows, roiling financial markets.

The same day the latest talks began, two U.S. warships sailed near islands claimed by China in the disputed South China Sea, a U.S. official told Reuters.

Asked if the ships’ passage would impact trade talks, Hua said that “a series of U.S. tricks” showed what Washington was thinking. But Hua added that China believed resolving trade frictions through dialogue was in the interests of both countries’ people, and of global economic growth.

China claims a large part of the South China Sea, and has built artificial islands and air bases there, prompting concern around the region and in Washington.

(Reporting by Michael Martina and Ben Blanchard in Beijing, and additional reporting by Susan Heavey in Washington; Editing by Kim Coghill and Nick Zieminski)