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US and China make significant step towards ending trade war

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The United States and China have started to outline commitments in principle in their trade dispute, a sign of progress towards an eventual deal.

The United States and China have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress towards ending a seven-month trade war.

The world's two largest economies have slapped tit-for-tat tariffs on hundreds of billions of dollars of goods, slowing global economic growth.

As officials hold high level talks on Thursday and Friday in Washington, they remain far apart on demands made by US President Donald Trump's administration for structural changes to China's economy.

But the broad outline of what could make up a deal is beginning to emerge, sources told Reuters, as the two sides push for an agreement by March 1. That marks the end of a 90-day truce that Trump and Chinese President Xi Jinping agreed when they met in Argentina last year.

Negotiators are drawing up six memorandums of understanding on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

The MOUs cover the most complex issues affecting the trading relationship between the two countries and are meant, from the US perspective, to end the practices that led Trump to start levying duties on Chinese imports.

One source cautioned that the talks could still end in failure.

But the work on the MOUs was a significant step in getting China to sign up both to broad principles and to specific commitments on key issues, he said.

The United States has accused Beijing of forcing US companies doing business in China to share their technology with local partners and hand over intellectual property secrets, an accusation China denies.

Trump administration officials also object to non-tariff barriers in China, saying they keep US goods out of China or give an advantage to domestic firms.

Treasury Secretary Steven Mnuchin has pushed for China to open its financial services markets to more foreign firms.

On currency, US officials including Mnuchin have warned China against devaluing its yuan to gain a competitive advantage after the Chinese currency weakened significantly against the dollar last year.

The parties also were looking at a 10-item list of ways that China could reduce its trade surplus with the United States.

Time is running short ahead of the March 1 deadline to resolve the dispute or see US tariffs on $200 billion worth of Chinese goods rise to 25 per cent.

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