America's trade deficit with China hit a record high in September, according to figures reported Friday by the U.S. Commerce Department.
The leaders of the world's two largest economies made the remarks after their first publicly disclosed telephone conversation in nearly six months. "By the way, the president on one of the cable shows, did say - it didn't get picked up - that if some kind of amicable deal with China were to happen, then a lot of tariffs might be pulled back". Bloomberg cited unnamed sources as saying that Trump had also asked his team to begin drafting terms for an agreement on trade with China, although economic adviser Larry Kudlow later denied that claim.
The two heads of state think they should enhance trade relations, ministry spokesman Lu Kang told a daily news briefing. He gave no indication whether they made progress on settling an escalating tariff war over Beijing's technology policy.
"I hope that China and the USA will meet each other halfway and will appropriately handle their differences with mutual respect and equal cooperation", stated the Chinese premier.
ENERGY: Oil prices continued to weaken after the Department of Energy said US crude stockpiles increased for the sixth straight week. "I am very cautious regarding the outcome of their meeting".
"Frankly, the principal culprit is China", he said.
Trump said on Twitter that trade discussions with China were "moving along nicely", and that he planned to meet with Xi on the sidelines of the G-20 leaders summit, after the two had a " very good" phone discussion.
The headwinds have increased with Trump's specific charge - publicly echoed by Vice President Mike Pence - that China is actively trying to interfere in the United States midterm elections, to be held on November 6.
China's foreign ministry on Friday said the call, which took place on Thursday, had been "extremely positive" and that the two leaders think they should enhance economic relations.
Lu Xiang, a specialist on United States affairs at the Chinese Academy of Social Sciences, said that Beijing had been preparing for a "worse than the worst" confrontation with the USA, and added that any further escalation would be fatal to an already highly volatile U.S. stock market. Trump administration officials have said that trade talks with China can not resume until Beijing comes up with specific actions it is willing take to meet USA demands for sweeping changes to policies on technology transfers, industrial subsidies and market access. "We are not on the cusp of a deal", Kudlow said.
Analysts said Trump could be simply trying to sooth investors and boost the stock market in the run up to the midterm elections by teasing a deal.