Xi Jinping tells Donald Trump US and China must co-operate

Donald Trump's win has raised much speculation about how the US-China relationship could change

Chinese President Xi Jinping has told US president-elect Donald Trump that co-operation is the "only correct choice" for relations, state media say.

The pair spoke as a Chinese state newspaper warned that the US could face retaliatory measures if new duties were placed on Chinese goods.

Mr Trump targeted China repeatedly on the campaign trail, pledging to put 45% tariffs on all its exports to the US.

He also vowed to label it a currency manipulator on his first day in office.

In their phone call, "the leaders established a clear sense of mutual respect for one another", Mr Trump's presidential transition office said in a statement.

"President-elect Trump stated that he believes the two leaders will have one of the strongest relationships for both countries moving forward," it said.

Mr Xi was quoted by China's CCTV as saying that there is "huge potential" in cooperation between the world's two largest economies.

The two men agreed to meet in person soon, CCTV said.

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The conversation came after the nationalistic Global Times newspaper, often cited as reflecting the views of the Communist Party, warned that China would take a "tit-for-tat approach" if Mr Trump imposed the tariff.

"A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted," an editorial on Sunday said.

"China can also limit the number of Chinese students studying in the US."

But the newspaper also asserted that Mr Trump "as a shrewd businessman will not be so naive" as to start a trade war.

Under Barack Obama, the US and China have butted heads on security issues, but co-operated on climate change

Chinese Foreign Minister Wang Yi said on Sunday that his country wanted to improve relations with the US under a Trump presidency.

Aside from tensions on economic issues, the two powers have butted heads in the South China Sea, where China has been aggressively reclaiming land despite overlapping territorial claims with several South East Asian countries.

On the campaign trail, Mr Trump had criticised US allies for free-riding under the US security umbrella. But last week James Woolsey, a senior national security adviser to Mr Trump, moved to reassure allies in Asia.

"The US sees itself as the holder of the balance of power in Asia and is likely to remain determined to protect its allies against Chinese overreach," he wrote in the South China Morning Post.