(Bloomberg) -- President Xi Jinping said U.S.-China trade talks would continue next week in Washington, as the two sides race to reach a deal that would avert a tariff increase on Chinese goods by March 1.
“Negotiations between both sides have achieved important progress in another step,” Xi said after a round of trade talks wrapped up in Beijing, according China’s Xinhua News Agency. “Next week, both sides are going to meet in Washington. I hope you keep up the good work, and push for a mutually-benefiting and win-win agreement.”
Xi said he values the “good working relationship” with President Donald Trump very much, and is willing to keep in touch with him in various ways. He added that China was “willing to solve the bilateral economic disputes and frictions through cooperation, and push for an agreement that both sides can accept. But cooperation has principles.”
Treasury Secretary Steven Mnuchin sounded a positive note on Friday, saying he and U.S. Trade Representative Robert Lighthizer held “productive meetings” with China’s Vice Premier Liu He. They both also met Xi later in the day.
“We feel we have made headway on very, very important and difficult issues,” Lighthizer said, according to the Associated Press. “We have additional work we have to do but we are hopeful."
The two sides remained far apart this week on structural reforms to China’s economy that the U.S. has requested, according to three U.S. and Chinese officials who asked not to be identified because the talks were private. They said it would likely take a meeting between Xi and Trump to seal a deal.
The U.S. and China were scrambling on Friday to produce a memorandum of understanding that would pave the way for a meeting between the two presidents, the Financial Times reported earlier, citing people briefed on the negotiations.
The U.S. has also not relented on demands for China to dial back government subsidies for state-owned enterprises and improve corporate governance, one of the people said, an extremely sensitive issue that is seen as a non-starter for Chinese leaders.
The uncertainty has weighed on investors, with Asian stocks retreating from the highest levels since October following a dip in U.S. equities. Both sides have an incentive to strike a deal: Trump has repeatedly linked market gains to his administration’s policies, while Bloomberg Economics estimates China would avoid a 0.3 percent drag on 2019 gross domestic product if the trade truce holds.
Trump earlier this week said he was open to delaying the deadline to more than double tariffs on $200 billion of Chinese goods if the two countries were close to a deal that addresses deep structural changes to China’s economic and trade policies. Bloomberg News reported late Wednesday that he’s considering pushing back the deadline by 60 days.
Asked Thursday if the Trump administration was considering extending the deadline for tariff increases, White House economic adviser Larry Kudlow said no decision has been made.
Negotiators in Beijing “are soldiering on” and the “vibe” is good, Kudlow said on Fox News, adding that he was briefed by U.S. officials earlier Thursday. “They are going to be meeting with President Xi tomorrow, which is a very good sign. They are moving through all of the issues. They are getting the job done.”
Kudlow later told reporters at the White House that he’s “cautiously optimistic” on the outcome of the talks with China.
A meeting date between Trump and Xi has not been set and it is unlikely the pair can meet before the March 1 deadline.
White House adviser Kellyanne Conway said on Tuesday that Trump wants to meet Xi “very soon.”
