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U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping at the Great Hall of the People in Beijing, China, on Nov. 9, 2017.Damir Sagolj/Reuters

The presidents of the United States and China said their countries are making progress toward a trade deal, offering hope to nervous investors after markets tanked this month on fears of worsening economic relations between the world’s two largest economies.

U.S. President Donald Trump and Chinese President Xi Jinping both expressed optimism following a telephone conversation Saturday. Mr. Trump tweeted that afternoon that the two had “just had a long and very good call” and that a “comprehensive” deal was “moving along very well…Big progress being made!”

The Chinese response was positive but more tempered. A report on Sunday in the state-controlled Xinhua news agency said both presidents expressed “their willingness to push for implementation of their agreements reached” when the two agreed at the Group of 20 summit in Argentina on Dec. 1 to suspend new tariffs for 90 days.

The world’s two largest economies have been in a trade war for much of 2018, shaking world financial markets as tariffs disrupted the flow of hundreds of billions of dollars worth of goods between them. The U.S. imposed tariffs on US$250-billion of Chinese imports to force concessions from Beijing on the list of demands that would change the terms of trade between the two countries. China responded with import tariffs on U.S. goods.

Mr. Xi told the Chinese news agency that the two sides have “been working to implement such consensus,” adding he hoped “both teams can meet each other halfway" to reach a mutually beneficial deal “as early as possible.” Mr. Xi said both he and Mr. Trump hope to push for a stable progress of the China-U.S. relationships, adding the bilateral ties are "now in a vital stage,” Xinhua reported.

Chinese Foreign Ministry spokesman Lu Kang further stated China “stands ready to work with the U.S.” on an agreement, expand co-operation in a mutually beneficial way and “manage differences on the basis of mutual respect.”

Trade officials from the two countries are set to resume talks in early 2019, the 40th anniversary of the United States and China establishing diplomatic ties. The Wall Street Journal on Saturday reported negotiators for the two countries have started to flesh out a deal but said Mr. Trump may have overstated how close the two sides were to a deal, citing unidentified sources familiar with the state of negotiations.

The two countries are the world’s largest trade partners. The United States imported US$540-billion worth of goods from China in the 12 months ended Oct. 31 while China-bound trade from the United States totalled US$129-billion, according to the U.S. Census Bureau. Foreign direct investment inflows into China fell in the first 11 months of 2018 by 1.2 per cent compared to the same period a year earlier, as many companies reconsidered plans to expand in the country, according to the South China Morning Post.

The trade talks cap off a year of increasing tensions between the world’s two main superpowers. U.S. authorities put increasing pressure on their Five Eyes intelligence-sharing partners, including Canada, to ban the use of equipment by Chinese telecommunications equipment giant Huawei Technologies in their next-generation 5G wireless networks over cybersecurity concerns. Five Eyes members Australia and New Zealand have announced bans along with the United States, while the Canadian government is undergoing a 5G cybersecurity review to determine if it will follow suit.

Bell Canada parent BCE Inc. and Telus Corp. are pressing the federal government not to block them from using Huawei equipment, warning that a ban on the Chinese company could lead to higher costs and delay the rollout of 5G wireless technology in Canada.

Canada found itself caught up in the U.S.-China dispute after Canadian authorities arrested Huawei chief financial officer Meng Wanzhou in Vancouver on Dec. 1 – the same day as the G20 meeting between Mr. Trump and Mr. Xi. Ms Meng was arrested at the request of the U.S. Justice Department for extradition to face fraud charges south of the border related to allegedly violating sanctions against Iran. Ms. Meng denied the allegations; she is now free on bail in Vancouver.

China sharply rebuked Canada for its action and subsequently detained two Canadians in China on national security grounds in what many observers believed was retaliation for Ms. Meng’s arrest. Meanwhile, Mr. Trump stated he could intervene in the case if he thought it would help secure a trade deal with China, which some legal experts said could undermine extradition efforts if Ms. Meng’s lawyers argue successfully that the case against her is politicized.

With files from Reuters

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