China, U.S. Working on Text of Phase One Trade Deal: MOFCOM

China’s Commerce Ministry said Thursday that China and the U.S. are ramping up consultations on the text of a partial trade deal, in a sign that the world’s two largest economies are making progress on deescalating trade tensions.

Asked about the state of trade talks following high-level meetings in Washington last week, Chinese Ministry of Commerce spokesperson Gao Feng told a press conference in Beijing that both nations were “intensifying consultations, trying to make the text of the [partial trade] deal workable.”

“Cooperation is the best and the only right way to solve problems between the two countries,” Gao said. He said a phased deal would help eliminate uncertainty, rebuild market confidence and stabilize the global economy.

Gao’s comments followed U.S. Treasury Secretary Steve Mnuchin’s Tuesday revelation during a wide-ranging press conference at the Treasury that the two sides were working on the text of the first phase of a trade deal. The concept of a phased deal was initially announced by U.S. President Donald Trump during his meeting with a Chinese trade delegation, led by Vice Premier Liu He, at the White House last Friday.

Mnuchin said the U.S. aims to see the agreement signed at an Asia-Pacific leaders’ summit in Chile next month, according to a Reuters report.

The U.S. Treasury chief said that the proposed text of trade deal’s first phase would include a “quite broad” chapter on protecting U.S. intellectual property rights in China, but only part of a chapter would aim to address U.S. claims about forced technology transfers from American companies to Chinese firms, the report said.

The initial phase would also deal with China opening its financial services market to foreign firms, structural agricultural issues and claims of currency manipulation, while non-financial services and some of technology transfer issues would be addressed in a second phase of talks, it said.

Mnuchin had confirmed last Friday that the U.S. side had “an agreement around transparency into the (China’s) foreign exchange markets.” Washington labeled China a currency manipulator in early August.

He said he was prepared to travel to Beijing for meetings if necessary, according to Reuters.

Mnuchin further rejected the notion that China had not agreed with the United States on the “substantial phase one deal,” according to the report.

On Tuesday, China's Foreign Ministry confirmed that China has “no difference” with the U.S. on the state of the talks, with spokesperson Geng Shuang clarifying that “what the US side said is true, and it is the same with our understanding on this agreement.”

While meeting Italian President Sergio Mattarella at the White House on Wednesday, Trump told reporters that “the deal won’t be signed probably until I meet with President Xi in Chile, where we have a summit.”

Trump and Xi are scheduled to participate in a leaders’ summit of the Asia-Pacific Economic Cooperation Organization, starting on Nov. 16. In his remarks last week, Trump suggested that if China and the U.S. come to an agreement on trade, “we’ll do a formal signing with President Xi and myself.”

On Wednesday, the U.S. president also dismissed suggestions that China would not purchase American agricultural products until the deal is signed. “They have already started purchasing; in fact, they started purchasing three weeks ago. You can see the numbers for yourself.”

Chinese companies have this year bought 20 million tons of soybeans, 700,000 tons of pork, 700,000 tons of sorghum, 230,000 tons of wheat and 320,000 tons of cotton from the U.S., according to China’s Foreign Ministry.

Contact reporter Lu Zhenhua (zhenhualu@caixin.com)