The United States was poised Thursday to announce a historic trade deal with China, days before new tariffs are due to kick in between the world's two largest economies, easing a commercial dispute that has roiled markets for almost two years.

Reports that Washington and Beijing had struck a bargain at last -- subject to approval by US President Donald Trump -- sent US stocks sailing to their first record closes of December.

"Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Trump tweeted in a markedly optimistic tone, although it was unclear if he would officially confirm the agreement on Thursday.

Trump's flagging of an imminent breakthrough comes ahead of new tariffs planned to take effect Sunday and also just as he is almost sure to become only the third US president to be impeached.

With his 2020 re-election battle heating up Trump is keen to seize the political initiative and show voters his punishing struggle with China has brought results.

The US ultimately wants China to open its vast economy to more goods and to conduct sweeping reforms of what Washington has long called systemic abuse against foreign investors.

Recently, though, White House officials have indicated they would settle for less in a so-called "phase one" deal.

The Washington Post reported that Trump had signed off on a swap of tariff reductions in return for China spending $50 billion on US farm goods, tightening its intellectual property protections and opening its financial services markets.

The paper cited Michael Pillsbury, a China expert at the Washington-based Hudson Institute it said had been briefed by Trump, and an unnamed senior administration official.

The paper reported that plans for an official announcement had not been nailed down, adding that the administration does not intend to seek congressional approval.

China's commerce ministry said Thursday the two sides were in "close" contact ahead of Sunday's deadline.

- Dodging new tariffs bullet -

In addition to existing tariffs, Trump had threatened to impose a 15 percent levy Sunday on around $160 billion of Chinese exports, including popular US consumer goods like electronics and clothing.

China had previously said it would respond with a 25 percent tariff on US autos and a five percent tariff on auto parts -- levies that were suspended earlier this year as a goodwill gesture.

According to The Wall Street Journal, the US side is offering to scrap the threatened Sunday tariffs and also cut existing duties imposed on about $360 billion in Chinese goods.

Trump's overall goal with China, a keystone of his presidency, is to uproot what Washington says are Beijing's predatory trade practices, including forced technology transfers and massive intellectual property theft.

Trump himself has blown hot and cold, repeatedly insisting that China needs a deal more than the United States does.

At the end of November, he said he was in the "final throes" of negotiations, but days later he spooked world financial markets when he said "I have no deadline" for a resolution.

The intense talks, involving multiple trips by teams from both sides to and from Washington and Beijing, were further complicated by tensions over the pro-democracy uprising in Hong Kong.

Trump, somewhat reluctantly, signed a law passed with overwhelming congressional support in November that backs the Hong Kong demonstrators.

Beijing responded that the law was "abominable" and "sinister," but ultimately appeared to have little in the way of counter-measures.

The US-China trade war: where are we now?
Washington (AFP) Dec 12, 2019 - The United States and China on Thursday reportedly struck a bargain on trade, that would cancel a fresh round of a tariffs on $160 billion in Chinese imports due to kick in on Sunday.

The news cheered investors, lifting Wall Street and marking a de-escalation after 20 months of trade conflict.

But where does this leave the two sides?

- Tariffs on hold -

If Trump has indeed called off Sunday's tariffs, it will mark the second time in 2019 he has refrained from acting on a threat.

Earlier in October, duties on $250 billion in Chinese goods had been due to rise to 30 percent from 25 percent.

But Trump initially postponed and then called this increase off, announcing on October 11 that the two sides had reached a "very substantial phase one deal." Since then however, the sides have struggled to finalize the agreement.

China, meanwhile, delayed new tariffs on 16 categories of US goods until September 2020.

More than $350 billion in Chinese merchandise is currently subject to punitive duties imposed during the trade war, something Trump hopes will push Beijing to end what Washington regards as unfair trade practices.

The December 15 tariffs target top-selling consumer items like mobile phones, shoes, sports apparel and toys -- items US consumers depend on heavily. If they did hit on Sunday virtually all Chinese goods exports to the United States will be covered by Trump's punitive new duties.

Beijing has mostly maxed out its ability to put tariffs on the roughly $120 billion in goods it imports from the United States.

Media reports on Thursday said US and Chinese officials struck a partial trade deal that awaits Trump's approval.

In a tweet on Thursday, Trump said the economic powers were getting "VERY close to a BIG DEAL" but this is not the first time he has made touted his grand hopes, only to hit snags later.

- Major hurdles -

Chinese officials have said they want some or all of the tariffs Trump has imposed so far to be removed in addition to those that had been set to take effect on Sunday.

According to reports, Washington also offered to slash existing tariffs on $360 billion in Chinese goods by as much as 50 percent.

Trump has also called on Beijing to commit to massive purchases of US farm exports, to take additional measures to protect intellectual property, end the forced transfer of proprietary technology and open Chinese markets wider to American financial services.

So far, Washington says US sanctions on the Chinese telecoms giant Huawei, which American officials accuse of violating US sanctions on Iran and claim is a tool of Chinese espionage, are a separate matter.

But it remains an obvious way for Washington to offer concessions to Beijing and Trump has said the two could be addressed together.

- Economic fallout -

The conflict has depressed trade between the United States and China. Through October, two-way goods trade has fallen nine percent to $469.8 billion, according to US Commerce Department figures.

US exports to China over that period are down 15 percent while imports from China have sunk seven percent.

The trade war has helped push the global manufacturing sector into decline, including in the United States, and created uncertainty for businesses, which have refrained from investing.

While slowing, the American economy has outperformed recent expectations. China's economy also slowed, and in the third quarter hit its weakest growth in 27 years.

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Chinese businesses boost self-reliance as trade war rolls on
Beijing (AFP) Dec 12, 2019
Whether Beijing and Washington reach a trade deal or not, China is already speeding up efforts to break its reliance on a country that is one of its biggest economic partners but also its biggest adversary. The effort has gained greater urgency for Beijing after more than a year and a half of protracted negotiations, painful tariffs and US sanctions against leading Chinese technology companies. Negotiators are working towards a potential "phase one" deal but tensions could escalate again if Pres ... read more