* China says it never wanted trade friction with Washington
* U.S. Treasury updates Trump on investment restrictions
* Boeing and Caterpillar shares rise; dollar up (Adds Treasury reports to Trump on Chinese investment curbs)
By Ben Blanchard, Michael Martina and Susan Heavey
BEIJING/WASHINGTON, May 21 (Reuters) - Washington and Beijing both claimed victory on Monday as the world's two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.
Over the weekend, the two sides pledged to keep talking about how China could import more energy and agricultural commodities from the United States so as to narrow the $335 billion annual U.S. goods and services trade deficit with China, although details and a firm timeline were thin.
The biggest immediate beneficiary appeared to be China, which won a reprieve from threatened tariffs on $50 billion of its exports to the United States as well as a lifeline for ZTE Corp, China's second biggest telecom equipment maker whose existence had been threatened by U.S. sanctions.
The United States, meanwhile, appeared to have won promises of more imports by China, although there were no specifics.
Threatened U.S. restrictions on Chinese investments in the United States also appeared to be put on the back burner. The U.S. Treasury said it met a legal obligation to report progress to President Donald Trump on the development of such restrictions, but it declined to provide details.
Treasury Secretary Steven Mnuchin "discussed options for the president's consideration on the matter," a Treasury spokeswoman said.
The Treasury has considered invoking the International Emergency Economic Powers Act, used extensively after the 9/11 attacks in 2001, to limit Chinese investments in U.S. technology companies.
Economists at Morgan Stanley estimated that exports of U.S. agricultural products, primarily beef, and energy, mostly liquified natural gas, could add between $60 billion and $90 billion to sales to China over a period of years. That is far less than the $200 billion reduction in China's trade surplus that Trump demanded at the start of talks.
"China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!" Trump wrote on Twitter on Monday.
China's government praised the cooling of trade tensions with the United States, saying agreement was in both nations' interests, while state media trumpeted what it said was Beijing's refusal to surrender to U.S. economic threats.
There were, however, more questions for the Trump administration, which stands accused by critics of selling out on plans to stop the theft of U.S. companies' trade secrets in exchange for a quick deal to reduce the U.S. trade deficit.
Questions also remained over the administration's handling of ZTE. The Chinese company was sanctioned by Washington after it was caught illegally shipping goods to Iran and effectively put out of business, but its fate was made a precondition of last week's trade talks in a conversation between Trump and President Xi Jinping.
Trump agreed to allow ZTE to stay in business, and the United States and China struck a deal to drop their tariff threats while they worked on a wider trade agreement, Mnuchin said on Sunday.
Washington had threatened to impose tariffs on $50 billion of Chinese imports unless Beijing rectified its theft of U.S. intellectual property. After China responded with its own tariffs on U.S. agriculture, Trump threatened to impose duties on an additional $100 billion of Chinese goods, a move that hit global stock markets hard due to fears of rising protectionism.
U.S. Commerce Secretary Wilbur Ross will travel to China next week to help finalize a trade agreement, Mnuchin said on Monday. Most observers say a firm deal is likely to take a long time.
In an interview earlier on Monday with CNBC, Mnuchin characterized the U.S. tariff plan as suspended, but warned that "the president can always put tariffs back on."
Speaking at a daily briefing, Chinese Foreign Ministry spokesman Lu Kang said both countries had clearly recognized that reaching a consensus was good for all.
"China has never hoped for any tensions between China and the United States, in the trade or other arenas," Lu said.
But others were quick to point out how the country had successfully defended its interests.
Mei Xinyu, a Commerce Ministry researcher, wrote on the WeChat account of the overseas edition of the ruling Communist Party's official People's Daily that the agreement preserved China's right to develop its economy as it sees fit, including moving up the value chain.
The deal also focused on China's "positive position" to increase imports rather than a "negative position" of getting it to cut exports, Mei said.
The official China Daily said everyone could heave a sigh of relief at the ratcheting down of the rhetoric, and cited China's chief negotiator, Vice Premier Liu He, as saying the talks had proved to be "positive, pragmatic, constructive and productive."
"Despite all the pressure, China didn't 'fold,' as U.S. President Donald Trump observed. Instead, it stood firm and continually expressed its willingness to talk," the English-language newspaper said in an editorial.
Some in U.S. business groups who had been pushing for tougher measures to pressure China to ease long-standing market barriers on U.S. companies expressed disappointment.
James Zimmerman, a Beijing-based lawyer and a former chairman of the American Chamber of Commerce in China, said the Trump administration's decision to walk back its threatened trade actions was premature and a "lost opportunity" for American companies, workers and consumers.
But Jacob Parker, vice president of China operations at the U.S.-China Business Council, called the apparent de-escalation in trade tensions "a great bit of progress."
"We were never supportive of tariffs, so any actions that can be taken to stop those from being implemented are positive from our view," Parker told Reuters.
Stocks with major exposure to China such as Boeing Co and Caterpillar Inc gained on news of a softening in the trade rhetoric of recent weeks. The dollar also gained against a basket of currencies. (Reporting by Ben Blanchard, Michael Martina and Susan Heavey Additional reporting by Susan Heavey in Washington and Elias Glenn; Editing by Paul Simao and Leslie Adler)