Embassy spokesman Zhang Yuan Yuan told a news conference China hopes a mutually satisfactory agreement can be reached. On Wednesday, the House voted to bar any compensation for China.
State Department spokesman Philip Reeker declined to confirm that talks were under way, saying only that the Pentagon is continuing to review the issue.
"We've expressed our readiness to consider the Chinese request for payment of only those reasonable and appropriate costs directly associated with the process of the return of the EP-3 aircraft," he said.
On Wednesday, the House voted 424-6 against compensating China for plane-related expenses or for housing the 24 crewmen on board for 11 days after their emergency landing on Hainan Island.
The plane had collided with a Chinese military plane on April 1 while flying off the Chinese coast. The surveillance plane was disassembled and transported to Georgia earlier this month.
State Department officials said China has asked for $1 million for services rendered, a figure that U.S. officials describe as excessive.
Zhang said China hopes the two countries have overcome the plane incident by now as it prepares for a visit by Secretary of State Colin Powell at the end of the month in Beijing.
"We are going to do everything we can to make it a success," Zhang said.
He said that while the two countries have differences, they share common ground on such issues as the Korean peninsula, the need for economic growth worldwide, nonproliferation and combatting drug trafficking.
Most of Zhang's remarks were directed at the Falun Gong meditation sect. He said the Falun Gong's ranks have thinned dramatically over the past two years, partially because of a government campaign to highlight the true nature of what he called the "doomsday, destructive cult."
As he spoke, dozens of yellow-shirted Falun Gong members demonstrated outside. One banner read: "255 Falun Gong practitioners tortured to death."
Asked about the torture allegations, Zhang said: "Many of the stories are completely fabricated ... Prison wardens are forbidden from physically abusing inmates."
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