China welcomed on Thursday a US offer to hold fresh trade talks, adding that the two are discussing the details, providing some hope the world's top two economies could step back from the brink of an all-out trade war.

The countries have been engaged in an escalating tit-for-tat trade fight for months but on Wednesday it emerged that US Treasury Secretary Steven Mnuchin had invited top Chinese officials to discuss the issue.

"The Chinese side believes that the escalation of the trade conflict is not in the interest of either party," commerce ministry spokesman Gao Feng told reporters at a regular news briefing.

Beijing "has indeed received an invitation from the US and holds a welcoming attitude to it", said Gao, noting the "two sides are still communicating on the specific details".

News of the possible high-level talks comes as a new business survey released Thursday showed that the majority of US firms in China are beginning to feel the pinch of the tit-for-tat trade battle.

The fight had looked like it would spiral further after US President Donald Trump last week threatened to impose tariffs on all $500 billion worth of imports from China.

Hopes for the resumption of negotiations sent Asian markets rallying with Hong Kong surging 2.5 percent -- having fallen for six straight days and into a bear market -- and Shanghai more than one percent higher.

But analysts cautioned the two sides may still be far from coming to an agreement.

The Trump administration may not be fully aligned on the matter, with the US Trade Representative still seeming to want to apply pressure, while Beijing may not be ready to budge on its positions, economist Andrew Polk wrote in the Trivium China newsletter.

"We don't think China has much more to offer than they already have, and the US doesn't seem like it's inclined to accept what is currently on the table," Polk told AFP.

"We may be in for another round of disappointment," Polk forecast of the "umpteenth round" of trade negotiations.

- Next wave -

Trump imposed the first phase of tariffs this summer on $50 billion of Chinese exports, including high-end technology parts and manufactured goods, while Beijing fired back dollar-for-dollar at US soybeans, autos and other farm goods.

The next wave of 25 percent tariffs on a further $200 billion in imports will loom over any talks -- after a public consultation period for affected businesses came to an end last Thursday.

Beijing has pledged to hit back with five to 25 percent tariffs on $60 billion in US imports in retaliation for any measures from the US.

Top White House economic advisor Larry Kudlow told Fox Business Network on Wednesday: "Secretary Mnuchin, who is the team leader with China, has apparently issued an invitation."

"Talking is better than not talking, so I regard this as a plus," he added.

- US firms hurting -

Sixty percent of American companies in China say they are hurting from the escalating trade spat, reporting increased costs, lower profits and stepped-up scrutiny, according to an American Chamber of Commerce in China survey of hundreds of US firms.

About half of American firms are making less money, and a similar amount are reporting higher production costs, according to the survey.

Roughly a third of firms are shifting supply chains out of China or the US, and an equal proportion are delaying or cancelling investment decisions, the survey showed.

More than half of US firms are also feeling Beijing's wrath from non-tariff measures like heightened regulatory scrutiny, more inspections and slower customs clearance, according to the survey.

The business lobby urged Washington to reconsider its approach.

"The US administration runs the risk of a downward spiral of attack and counter-attack, benefiting no one," said William Zarit, the chamber's chairman.

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China warns of 'serious hazard' of protectionism at WEF meeting
Hanoi (AFP) Sept 12, 2018
China warned Wednesday that protectionism poses a "serious hazard" to growth and cautioned "individual countries" against isolationism, in a veiled reference to the deepening trade spat between Washington and Beijing. The comments from China's vice premier comes as the world's top two economic powers edged closer to an all-out trade war after imposing tit-for-tat tariffs on billions of dollars of imports. Tensions were heightened last week when President Donald Trump threatened to hit all Chin ... read more