The leaders of the United States and China on Friday both underscored their desire to sign an initial trade deal and defuse a 16-month tariff war that has lowered global growth, providing a welcome boost to financial markets.
The Chinese President, Mr. Xi Jinping, in rare comments on the trade tensions with Washington, said Beijing wants to work out an interim or 'phase one' trade pact, but is not afraid to retaliate when necessary. Hours later, the US President, Mr. Donald Trump, said a trade accord with China is 'potentially very close,' although he insisted that any deal would have to be weighted to favor the US after years of trade imbalances with China. Speaking on Fox News Channel's 'Fox & Friends,' Mr. Trump also urged China and Hong Kong to calm the situation in Hong Kong, wracked by months of pro-democracy protests, calling it a complicating factor in the trade talks.
The S&P 500 and Dow Jones indexes eked out gains on Friday after the comments by Mr. Trump and Mr. Xi, reversing losses triggered earlier in the week by reports that a truce could slip into next year. Economists say the prolonged dispute between the world's two largest economies is lowering global growth, disrupting supply chains, curtailing investment and curbing business confidence.
'We want to work for a 'phase one' agreement on the basis of mutual respect and equality,' Mr. Xi told representatives of the New Economy Forum, according to a report. 'When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want.'
Global financial markets retreated this week on fresh fears that the trade talks could flounder, unnerved by reports that Mr. Trump could sign into law two bills backing protesters in the Chinese-ruled Hong Kong.
Mr. Trump did not make clear his intentions during the interview, saying, 'We have to stand with Hong Kong but I'm also standing with President Xi.'