US, China closing in on a trade deal

Trump and Xi are close to a new US and China trade deal report

Enlarge Image Chinese President Xi Jinping and President Donald Trump Getty Images

Chinese stocks surged on Monday, adding to recent gains after reports that Washington and Beijing are close to reaching a deal to end their year-long trade war, and as China prepared for the opening of its annual session of parliament.

The Wall Street Journal said that in the pending agreement, China would lower tariffs on us -made goods including agricultural products, chemicals and cars in exchange for sanctions relief from Washington, citing people briefed on the matter on both sides.

U.S. Secretary of State Mike Pompeo is expressing optimism that trade talks with China aimed at ending tariffs on hundreds of billions of dollars worth of products will be successful.

In exchange for Chinese concessions, Washington would do away with most of the trade sanctions it imposed a year ago, the report said.

Not everyone sees the possibility of a trade deal lifting markets higher, however.

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"I think that it looks like Ambassador Lighthizer has made a lot of progress, and we might get there on China", Hassett said, adding that details of any deal were still being worked out.

Also mentioned would be an $18 billion natural-gas purchase from Cheniere Energy, people familiar with the transaction said.

As part of a deal, China is pledging to speed up the timetable for removing foreign-ownership limitations on auto ventures, and to reduce tariffs on imported vehicles to below the current rate of 15 per cent, the newspaper reported.

Asked during a congressional hearing last week whether a deal would see a lifting of US tariffs, Robert Lighthizer, the China hawk now leading the talks with Beijing, would say only that was China's desire.

President Donald Trump's trade war cost American businesses and consumers $3 billion a month a year ago in higher prices, according to a study by top economists.

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Trump and members of his economic team have has sounded optimistic about the chances for sealing a deal.

Trump last week postponed increasing the tariffs on $200 billion in Chinese goods from 10 percent to 25 percent because of the "substantial progress" of the talks between the two countries.

World markets were buoyed early on Monday by investors' optimism for a deal, but US stocks closed lower after USA construction spending data for December fell unexpectedly, causing concerns that fourth quarter growth was weaker than estimated.

On Friday, Trump said he demanded Beijing, in response to his tariff delay, immediately remove all duties on USA agriculture products.

Still, the USA president has repeatedly delayed implementing higher duties on goods to give the two sides more time to strike a broad deal.

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It added that oil, liquefied natural gas and other energy products would likely have the biggest potential to fuel US export growth to China under such an agreement.

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