President Donald Trump has said he will extend a deadline to escalate tariffs on Chinese imports, citing “substantial progress” in weekend talks between the two countries.
Mr Trump tweeted on Sunday that there had been “productive talks”, adding that: “I will be delaying the US increase in tariffs now scheduled for March 1.”
Mr Trump says that, if negotiations progress, he will meet with Chinese President Xi Jinping at his Florida resort to finalise an agreement.
US and Chinese negotiators met through the weekend as they seek to resolve a trade war that has rattled financial markets.
Mr Trump had warned he would escalate the tariffs he has imposed on $200bn in Chinese imports, from 10 to 25%, if the two sides failed to reach a deal.
Speaking to governors gathered at the White House for an annual black-tie ball on Sunday, Mr Trump said he was doing “very well” with China.
“If all works well we’re going to have some very big news over the next week or two,” he said, though he took care to add that “we still have a little ways to go”.
Asian stock markets rose following Mr Trump’s announcement.
The Shanghai Composite index jumped 5.5%, while other markets in the region also rose, but by smaller margins.
Hong Kong’s Hang Seng index added 0.5% while Tokyo’s Nikkei 225 also climbed 0.5%.
The world’s two biggest economies have been locked in a conflict over US allegations that China steals technology and forces foreign companies to hand over trade secrets in an aggressive push to challenge American technological dominance.
The two counties have slapped import taxes on hundreds of billions of dollars of each other’s goods.
The conflict has unnerved investors and clouded the outlook for the global economy, putting pressure on Mr Trump and Mr Xi to reach a deal.
Chinese negotiators said the talks made progress on technology transfer, protection of intellectual property rights and non-tariff barriers, according to the official Xinhua News Agency.
It cautioned there are “still some differences that need more time to be ironed out”.
“Trump clearly wants a deal and so do the Chinese, which certainly raises the probability that the two sides will come to some sort of negotiated agreement, even if it is a partial one, in the coming weeks,” said Cornell University economist Eswar Prasad, former head of the International Monetary Fund’s China division.
On Twitter, Mr Trump said the two sides had made headway on issues including protection of trade secrets, forced technology transfer and US agricultural sales to China. But the administration did not immediately provide details.
Business groups and politicians in Congress want to see a comprehensive deal that forces the Chinese to change their behaviour and that can be enforced.
The US has accused China of failing to meet past commitments to reform its economic policies.
“Encouraging news from @POTUS that progress is being made in a trade deal with China. Hopefully this leads to an agreement that stops China’s theft of US intellectual property and avoids a full blown trade war,” tweeted Republican Senator Pat Toomey of Pennsylvania
But critics worry that the president has given up leverage.
“They now have lost the advantage of a deadline,” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W Bush, adding that “I see the odds tilting” in China’s favour.