With its long-anticipated petroyuan contract only hours old, senior government officials in Beijing are reprotedly working with the US to try and reach an agreement that would stave off a tit-for-tat trade war between the world's two largest economies, according to the Financial Times and Wall Street Journal.

Treasury Secretary Steve Mnuchin along with trade representative Robert Lighthizer on one side, and Vice Premier Liu He, effectively China's economy czar and President Xi Jinping' "real second-in-command" on the other, have been negotiating behind the scenes, according to the FT.

And although nothing has been finalized, Liu has assured Mnuchin that China would cave on several US demands, including allowing foreign investment in Chinese securities firms and offering to buy more semiconductors from US semiconductor firms, the FT reported. There's also been talks that China could loosen restrictions on foreign investment in manufacturing, telecom, medical and education.

Mnuchin, who is reportedly considering whether he should plan a trip to Beijing to expedite the negotiations, said Sunday after the US and South Korea reached a trade deal to exempt the South from US aluminum and steel tariffs that he was optimistic the US might reach a similar agreement with China. The Treasury secretary has reportedly handed Liu a list of US priorities, including loosening restrictions on US auto imports.

Late last week, President Trump announced that he planned to impose $60 billion in tariffs on Chinese industrial exports to reduce China's nearly $400 million merchandise trade surplus with the US. Beijing subsequently announced it would retaliate with sanctions on a just $3 billion of US imports, with threats of more sanctions to come.

Chinese officials had initially been working to allow foreign majority control of securities companies by June 30, but Liu is now aiming for formal State Council approval as early as May. The liberalization would raise the 49% foreign ownership ceiling for securities firms to 51%. It was first outlined by China’s finance ministry in November. At the time, Zhu Guangyao, vice-finance minister, also said the cap would be lifted within three years.

Furthermore, more moves to ease foreign ownership limits in China’s commercial banking and insurance sectors could be revealed next week when President Xi addresses the Boao Forum for Asia, an annual meeting modeled on the World Economic Forum and hosted by the Chinese government on the southern island province of Hainan.

It's also unclear how Washington might react to Beijing’s proposal that Chinese firms buy more semiconductors from the US because that would disadvantage South Korea and Taiwan, two of the US's most important allies in the region.

"The US would basically be stealing from their surpluses with China," one person said.

In an interview with Chinese media published Monday, Li Keqiang emphasized that there was no point in a trade war between the US and China, and that the two sides would come to a reasonable solution. Li added that China would cease its practice of forcing foreign firms to turn over valuable intellectual property by partnering with China firms in "joint ventures."

US plans to impose more tariffs on Chinese goods have rattled the global community. As WSJ points out, farm-belt Trump voters, whose exports face possible retaliatory tariffs by China, decried the tariff plans, and in foreign capitals from Canberra to Brussels, US allies nervously weighed diplomatic options as tensions mounted between Washington and Beijing.

But China is hoping it's launch of the petroyuan contracts will help speed up the internationalization process - and the ascendance of the yuan as a reserve currency. For now at least, it needs to appease the US.

The MSCI World Equity Index turned positive on the news of a trade war truce, and as reported moments ago, the S&P has soared over 1% to start the holiday-shortened week.