China and the United States are still in frequent discussion about a bilateral trade pact, despite a challenging global trade environment, a Chinese commerce official said on Thursday.

Donald Trump’s nomination as the presumptive GOP candidate has come amid global alarm that the openly protectionist candidate will launch a series of anti-free trade initiatives if elected. However, a trade war with Mexico, and even more so with China, would have catastrophic consequences for the U.S. economy.

The US wants China to deepen its market-oriented reform and maintain social stability, and on the other, it demands that China reduce its excess capacity immediately. These two tasks are obviously contradictory, and now that China has become the largest trading partner of the US, a cooperative approach by both sides is both logical and necessary.

We often hear that China “manipulates its currency” and harms the U.S. economy. Some say if we punish China as a manipulator or slap tariffs on Chinese goods it would reduce our trade deficit. But what does currency manipulation mean? More importantly, would tariffs on Chinese goods help our economy?

The United States warned China on Thursday that it had not done enough to qualify for market economy status, especially in steel and aluminium, sowing the seeds for a trade battle between Washington and Beijing at the end of 2016.

An outflow of capital from China, and the trade deficit it has created for rich countries and especially the United States, has led to an enormous gap in demand. The key route to reducing the trade deficit is a lower value of the dollar, which would require China to decrease its foreign reserves. As negotiations work, this would mean the United States would have to make concessions in other areas of the bilateral relationship.

For Asia, the bad news this week was not that Donald J. Trump detailed a seven-point plan to toughen American trade policy, especially toward China. It was that Hillary Clinton’s campaign accused Mr. Trump a few hours later of purloining her ideas, noting that she favored similar action on those issues.

China and the United States are nearing the end of negotiations over a key agreement aimed at increasing trade between the two nations, former Chinese minister of commerce Chen Deming reportedly said Wednesday.

Rising incomes, limited farmland, and polluted water and soil has prompted China to look overseas for agriculture imports. Over the last decade, the United States has been China’s top agricultural partner and this relationship looks likely to continue and indeed strengthen.

Despite President Xi Jinping’s efforts to assuage the concerns of U.S. business executives while in Seattle, Hugh Stephens argues that these statements don’t reflect reality—that China imposes a much wider range of restrictions on U.S. investors than is the case for Chinese investment in the US.