By Bob Davis and Alex Leary 

WASHINGTON -- President Trump expressed optimism Friday that the U.S. could cut a deal with China to ease trade tensions, but said he would continue to press Beijing for more concessions.

"China wants to make a deal," Mr. Trump said in the Oval Office, where he reviewed the state of negotiations ahead of a meeting with Chinese leader Xi Jinping at the Group of 20 nations summit in Buenos Aires this month.

"They sent a list of things that they're willing to do, which was a large list. And it's just not acceptable to me yet," Mr. Trump said. "But at some point, I think that...we are doing extremely well with respect to China."

The U.S. president kicked off the latest round of talks with a phone call to Mr. Xi on Nov. 1. That was followed by conversations between Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, the two main negotiators.

Discussions have continued between the two nations, particularly between Treasury Undersecretary David Malpass and China's Vice Commerce Minister Wang Shouwen, who spoke by teleconference. The Chinese side also presented an offer that Beijing hopes could ease trade tensions.

But that offer doesn't go far beyond what China has already said it would do, such as removing equity caps on foreign investments in some sectors, including auto and financial sectors, according to people briefed on the offer. It doesn't address some of the main demands of the Trump administration, particularly how to deal with Beijing policies that favor state-owned Chinese firms at the expense of American business, or the U.S. allegation that Beijing coerces American firms to transfer technology to Chinese partners.

As part of the response, China is asking the U.S. to lift tariffs on Chinese steel and aluminum exports, ease export controls, and grant licenses for some Chinese businesses to do business in the U.S., say the people.

The response inside the U.S. government has followed familiar lines, say the people. Officials at the U.S. Trade Representative's office, which takes a hawkish view on China, have dismissed it as woefully insufficient. Others at the Treasury and National Economic Council, which have been pressing for a deal, look at the Chinese response as a starting point.

At the G-20, Treasury and the White House take the lead on planning meetings.

Concern is also growing among Mr. Trump's populist backers that he will settle too easily with China. The right-wing website Breitbart attacked the "trade surrender lobby" in the Trump administration for pushing a "truce" with China. Mr. Trump has sometimes backed away from a prospective deal with China when criticized from the right.

During negotiations in Beijing in May, U.S. negotiators gave their Chinese counterparts an eight-section list of demands, which included cutting the $375 billion bilateral trade deficit by $200 billion, reducing state subsidies, and ending pressure on U.S. firms to transfer technology.

Afterward, Chinese negotiators divided the demands into 142 separate items and said they would negotiate on 122, without specifying which.

On Friday, Mr. Trump suggested there had been some progress in the negotiations.

The new Chinese list has "a lot of the things we asked for," he said. "There's some things -- there were four or five big things left off. I think we'll probably get them, too." Mr. Trump didn't name those items.

U.S. officials have said that the most they expect from the Trump-Xi meeting is an agreement to hold off further tariffs and start formal negotiations -- a kind of cease-fire.

The U.S. has assessed tariffs on $250 billion of Chinese imports, roughly half of what China ships to the U.S. annually. Of that amount, the tariff on $200 billion of goods is 10% -- not much of a hit for importers given that the Chinese yuan has fallen about that much since the U.S.-China trade fight heated up this spring.

On Jan. 1, 2019, however, that levy is scheduled to jump to 25%. Mr. Trump has also threatened levies on the rest of Chinese imports to the U.S.

Lingling Wei contributed to this article.

Write to Bob Davis at bob.davis@wsj.com and Alex Leary at alex.leary@wsj.com

(END) Dow Jones Newswires

November 16, 2018 16:49 ET (21:49 GMT)

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