(Bloomberg) -- U.S. Trade Representative Robert Lighthizer spoke by phone with Chinese Vice Premier Liu He on Monday, a USTR spokesman said, as preparations advance for a highly anticipated meeting between leaders of the world’s two-biggest economies later this week.
China’s commerce ministry confirmed the phone call, saying that Liu spoke with both Lighthizer and Treasury Secretary Steven Mnuchin about trade and economic issues.
The trade negotiators are due to lay the groundwork for a meeting between U.S. President Donald Trump and Chinese leader Xi Jinping on the sidelines of the Group of 20 summit on June 28-29 in Osaka, Japan. No other details on the substance of the call were immediately available.
Trade negotiations broke down last month after the U.S. accused China of reneging on key aspects of the deal, leading to an escalation that has begun directly affecting large companies from both countries. Failure to reach even a temporary truce in Osaka risks leading to a modern-day cold war that could alter global supply chains.
U.S. Commerce Secretary Wilbur Ross last week downplayed the prospects of a major deal, telling Bloomberg TV the gathering was too broad an event to expect much progress. The best-case scenario laid out by officials and analysts from both countries is that the meeting might yield a pause in any new U.S. tariffs and a resumption of the talks, similarly to the truce struck between Trump and Xi at the G-20 summit in Argentina late last year.
Stocks are pricing in about a 20% chance of a resolution in the trade war, Goldman Sachs Group Inc (NYSE:GS) strategists wrote in a recent note to clients. That’s a change from mid-April, when markets had priced in an 80% chance of a deal.
(Updates with China response.)