With business confidence already badly hit by the U.S.-China trade war, even a small deal reached between the two countries could help to lift sentiment, Blackstone Executive Vice Chairman Tony James said on Saturday. Such a deal could include agreements on "easy items" such as China buying more U.S. agriculture products, but leaving out major sticking points such as intellectual property protection, according to James. "I wouldn't underestimate the importance of getting the easy items agreed," he told CNBC's Nancy Hungerford at the Singapore Summit. Even a small deal would send the message that both countries are willing to talk, which would help business confidence, he went on to say.

I'm still optimistic, but less optimistic ... I suspect now it'll be smaller than what I was anticipating last year, and less certain. Tony James Blackstone Executive Vice Chairman

"More importantly, though, if there's no trade deal, there's no basis for continuing discussion between the countries, there's no commonality of interests. And I worry at that point it could spiral out of control to become much more hostile, much more adversarial and ultimately cold war-ish," he added.

Tampering down expectations

But James admitted that compared to a year ago, he's now less optimistic the U.S.-China trade war could be resolved. That "smaller" deal that he outlined is more modest than his earlier expectations, he added. "I'm still optimistic, but less optimistic," he said, adding that it's in the two countries' and leaders' interests — for both economic and political reasons — to get some kind of a deal. But, "I suspect now it'll be smaller than what I was anticipating last year, and less certain, for sure. So, yes, optimism that something will happen, but it will be more modest," he said.

The U.S.-China dispute, which has lasted for more than a year, started with a tariff fight but spilled into other areas such as technology. The latest escalation in tensions has dampened expectations that the two economic giants could resolve their differences anytime soon. On Friday, Chinese negotiators who were in Washington to discuss trade ahead of high-level meetings next month cancelled a planned visit to meet U.S. farmers. No explanation was given as to why they were cutting their trip short.

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