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US and China trade negotiators discuss concerns of phase one

Washington

US and Chinese trade negotiators held "constructive discussions" in a phone call on Saturday to address each side's core concerns of phase one of the trade deal.

China's Vice-Premier Liu He, the country's key negotiator in the trade talks with the US, spoke with Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, according to the Chinese Commerce Ministry in a statement on Sunday. The call was held at the request of the US negotiators, and the two sides agreed to remain in close communication.

The phone call came after President Donald Trump's administration signalled that talks with China over the first phase of a broad trade agreement are entering the final stages. That's when the most contentious and complex issues are debated, with no guarantee that another breakdown will be averted.

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White House economic adviser Larry Kudlow told reporters late on Thursday in Washington that "we are coming down to the short strokes" and are "in communication with them every single day". Still, he acknowledged a deal was close though "not done yet". The last stages of trade agreements are often where talks break down, and Mr Trump still hasn't publicly indicated his approval.

The two sides were close to concluding a pact about six months ago, only for the US to claim that China backed away from verbal commitments when the time came to sign the deal.

The two sides have held working-level video conferences focused on issues ranging from the details and timeline of Chinese purchases of US agricultural goods such as pork and soyabeans to commitments to curtail theft of intellectual property that Mr Trump is demanding from China, according to people familiar with the discussions.

US stocks rose to all-time highs and Treasuries edged lower on Friday following Mr Kudlow's comments. The S&P 500 reached another record and gained for the sixth week in a row, the longest streak in two years. Both the Dow Jones Industrial Average, which passed 28,000 for the first time, and the Nasdaq Composite also hit all-time highs.

The dialogue on Saturday followed a phone call between the trade negotiators earlier this month, where the two countries signalled they were getting closer to agreeing on the first phase of a deal aimed at reducing tensions in a trade war that's slowed the global economy. The three spoke by phone at the time and separately released statements describing the call as "constructive". BLOOMBERG