In a major reversal to his stated foreign policy framework with China, in his first phone call held with China's president Xi Jinping held on Thursday night, President Donald Trump agreed to honor the "one China" policy, easing a key source of diplomatic tension between the world’s two largest economies. The phone call came just one day after Trump sent Xi a letter stating he seeks a "constructive relationship" with China, took place hours after a US Appeals Court ruled against the Trump Administration's executive order on immigration, and came ahead of Trump's first official meeting with Japan's PM Shinzo Abe.

In December, then president-elect Trump angered Beijing by talking to the president of Taiwan and saying the United States did not have to stick to the policy, under which Washington acknowledges the Chinese position that there is only one China and Taiwan is part of it. Trump later said the policy is "open to negotiation" putting further pressure on US-China relations. No issue is more sensitive to Beijing than Taiwan.

“The two leaders discussed numerous topics and President Trump agreed, at the request of President Xi, to honor our ‘One-China’ policy,” the White House said in a statement on Thursday night. “They also extended invitations to meet in their respective countries. President Trump and President Xi look forward to further talks with very successful outcomes.”

The White House statement described the call as “lengthy” and “extremely cordial,” providing no further details on what they discussed. Representatives from both sides would meet later to discuss and negotiate on “various issues of mutual interest,” it said.

The call came after U.S. and China military aircraft had an “unsafe” encounter over a disputed part of the South China Sea, the first publicly confirmed incident since May. The two surveillance planes flew within 1,000 feet of each other near the Scarborough Shoal, which is claimed by both China and the Philippines, a U.S. treaty ally.

Xi said it was necessary for both sides to increase cooperation, state-run China Central Television said. The Chinese president said his country was willing to boost ties with the U.S. on trade, investment, technology, energy and infrastructure. Xi also said the two countries should enhance communication in international and regional military affairs. “Facing an extremely complicated global situation and rising challenges, there’s a greater need for continuing to enhance cooperation between China and the U.S.,” Xi said, according to CCTV.

China and the United States also signaled that with the "one China" issue resolved, they could have more normal relations.

Below is a full timeline of Trump's stance on the "One China" policy courtesy of Reuters.

Dec 2 - Trump speaks by phone with President Tsai Ing-wen of Taiwan, a move that is likely to infuriate China, which considers the self-ruled island its own, and complicate U.S. relations with Beijing. China lodges swift protest, blaming Taiwan for the petty move.

Dec 11 - Trump says the United States did not necessarily have to stick to its long-standing position that Taiwan is part of "one China," questioning nearly four decades of U.S. policy.

Dec 12 - China expresses "serious concern" after Trump said the United States did not necessarily have to stick to its long-held stance that Taiwan is part of "one China".

Dec 14 - In a veiled warning to Trump, China's ambassador to the United States says Beijing will never bargain with Washington over issues involving its national sovereignty or territorial integrity.

Jan 11 - Taiwan scrambles jets and navy ships after a group of Chinese warships, led by its sole aircraft carrier, sailed through the Taiwan Strait, the latest sign of heightened tension between Beijing and the island.

Jan 12 - Trump's then nominee for secretary of state, Rex Tillerson, says China should be denied access to islands it has built in the contested South China Sea, describing the placing of military assets there as "akin to Russia’s taking Crimea” from Ukraine.

Feb 3 - China's top diplomat, Yang Jiechi, tells Michael Flynn, Trump's National Security Advisor, that China hopes it can work with the United States to manage and control disputes and sensitive problems.

Feb 9 - Trump breaks the ice with Xi in a letter that says he looks forward to working with him to develop relations.

Feb 9 - Trump changes tack and agrees to honor the "one China" policy during a phone call with Xi.

While Chinese Foreign Ministry spokesman Lu Kang also said the conversation was “very good” and “extensive,” he noted that “respect for the One-China policy is the obligation of the U.S. side.” The country’s dealing with Taiwan must come within that framework, Lu said at the ministry’s daily news briefing in Beijing. “The one China principle is the political foundation of the China-U.S. relationship,” he said. “From the phone call between the two presidents, we can see that the American government is committed to the One-China policy, and we appreciate that.”

Lu added that "ensuring this political basis does not waver is vital for the healthy, stable development of China-U.S. relations," Lu said.

A spokesman for Taiwan President Tsai Ing-wen said in a statement it was in Taiwan's interest to maintain good relations with the United States and China.

The U.S. and Chinese leaders had not spoken by telephone since Trump took office on Jan. 20. According to Reuters, diplomatic sources in Beijing said China had been nervous about Xi being left humiliated in the event a call with Trump went wrong and the details were leaked to the media.

In a separate statement carried by China's Foreign Ministry, Xi said China appreciated Trump's upholding of the "one China" policy. "I believe that the United States and China are cooperative partners, and through joint efforts we can push bilateral relations to a historic new high," the statement quoted Xi as saying. "The development of China and the United States absolutely can complement each other and advance together. Both sides absolutely can become very good cooperative partners," Xi said.

Taiwan's top China policymaker, the Mainland Affairs Council, said it hoped for continued support from the United States and called on Beijing to adopt a "positive attitude" and "pragmatic communication" in resolving differences with Taiwan. China is deeply suspicious of Tsai, whose ruling Democratic Progressive Party espouses the island's formal independence, a red line for Beijing, and has cut off a formal dialogue mechanism with the island. Tsai says she wants peace with China.

In a statement to Reuters, lawyer James Zimmerman, the former head of the American Chamber of Commerce in China, said Trump should have never raised the "one China" policy in the first place. "There is certainly a way of negotiating with the Chinese, but threats concerning fundamental, core interests are counterproductive from the get-go," he said in an email.

"The end result is that Trump just confirmed to the world that he is a paper tiger, a 'zhilaohu' – someone that seems threatening but is wholly ineffectual and unable to stomach a challenge."

Jia Qingguo, dean of the School of International Studies at Peking University and who has advised the government on foreign policy, said Trump had created a lot of uncertainty but was now back on track. "Trump has reassured people that he will be a responsible president," he told Reuters. "...This is good news for China, because stable U.S.-China relations are good for China. Now we can do business."

The White House described the call, which came hours before Trump plays host to Japanese Prime Minister Shinzo Abe, as "extremely cordial", with both leaders expressing best wishes to their peoples. There was little or no mention in either the Chinese or U.S. statement of other contentious issues - trade and the disputed South China Sea - and neither matter has gone away. China on Friday reported an initial trade surplus of $51.35 billion for January, more than $21 billion of which was with the United States.