US President Donald Trump and Chinese President Xi Jinping agreed to dial down an escalating trade war at a high-stakes meeting on Saturday, following a summit of leaders of the world's largest economies that called for overhauling global trade rules.

Trump and Xi, accompanied by their aides, met for dinner in the Argentine capital, Buenos Aires, for trade talks that were being widely watched by financial markets concerned that escalation of a trade war between the world's two largest economies could damage global growth.

Read more: G20: What is it and how does it work?

"The relationship is very special — the relationship that I have with President Xi — and I think that is going to be a very primary reason why we will probably end up getting something that will be good for China and the United States," Trump said at the start of the dinner.

Xi told Trump, "Only with cooperation between us can we serve the interest of both peace and prosperity."

Trade war ceasefire

After the meeting, Chinese Foreign Minister Wang Yi said the two sides "have come to an agreement on stopping the imposition of additional tariffs," which Trump had threatened to impose if talks did not advance.

"The principal agreement has effectively prevented further expansion of economic friction between the two countries and has opened up new space for win-win cooperation," Wang said.

The White House issued a simultaneous statement saying that the two sides had agreed to extend trade negotiations for 90 days, during which no new tariffs would be imposed on Chinese goods. 

"Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent."

In an apparent victory for the Trump administration, the White House said, "China will agree to purchase a not-yet-agreed-upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries."

The leaders also "agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture," the White House said.

Washington and Beijing have imposed hundreds of billions of dollars in tariffs on each others' goods in recent months. Trump had threatened to increase tariffs on $200 billion (€176 billion) of Chinese goods to 25 percent in January, from 10 percent now. He has also said the United States may add tariffs on another $267 billion of imports if talks break down.

Revamping the WTO

Earlier Saturday, the Group of 20 industrialized nations, which account for two-thirds of the global population and 85 percent of the global economy, called for reforming the World Trade Organization (WTO) in a final communique reached after two days of talks.

"We recognize the contribution that the multilateral trading system has made," the statement read. "The system is currently falling short of its objectives and there is room for improvement. We, therefore, support the necessary reform of the WTO to improve its functioning. We will review progress at our next Summit" to be held in Japan next year."

The non-binding agreement notably omitted the word "protectionism" under resistance from the United States, which under Trump has pursued an "America First" policy.

European states have joined US-led calls to reform of the WTO, but are worried that a trade war between Washington and Beijing could hit the global economy. Trump's hardball trade policies have also targeted the EU and other US allies.

"Everyone agrees that the WTO should be reformed," German Chancellor Angela Merkel said. "This is an important agreement.

"We all realize that we are indirectly influenced by the fact that China-US economic relations are not running as smoothly as a world order needs," Merkel added.

Read more: China's economy not opening up despite Beijing's assurances

The International Monetary Fund (IMF) chief warned leaders at the G20 of economic upheaval if Washington and Beijing continued to escalate a trade war.

"The choice is clear," Christine Lagarde said. "There is an urgent need to de-escalate trade tensions, reverse recent tariff increases, and modernize the rules-based multilateral trade system."

The United States argues the WTO has failed to force China to open up its economy as anticipated when Beijing joined the trade body in 2001. Washington also accuses China of stealing trade secrets and forcing American firms to hand over technology in exchange for access to the Chinese market, which is dominated by state-tied firms. China accuses the Trump administration of pursuing protectionist policies and has criticized US threats. 

Read more: China's road from copycat to innovator

US odd one out of climate change

On climate change, the G20 final communique left the United States isolated ahead of a UN climate meeting in Poland starting on Sunday to hammer out details of how countries will meet their commitments under the Paris accords to avert catastrophic global warming and mitigate its impacts.

All signatories confirmed their commitment to the Paris accord, but the G20 communique said the "United States reiterates its decision to withdraw from the Paris Agreement."

"We will send a clear signal — in any case, most of us" — for the success of climate talks in Poland, Merkel said.

Read more: Crunch time for the climate at COP24 

The World Wildlife Fund and Greenpeace welcomed the final statement.

"The necessity of the US being part of the effort to fight climate change cannot be denied, but this is a demonstration that the US is still the odd one out," they said.

The Trump administration's position on climate change stands in opposition to the international scientific consensus and even his own government, which issued a report last week warning of huge economic costs if climate action is not taken now.

cw/sms (AFP, AP, dpa, Reuters)

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