"The prospect of being hanged focuses the mind wonderfully," said the compiler of the first English language dictionary Samuel Johnson. Mr. Johnson might have had negotiations for a new trade agreement between the US and China in mind when he wrote it.

With the threat of a genuine trade war hanging over their heads, high level officials of the American and Chinese government are making "good progress" toward reaching an agreement that would open Chinese markets to more US products while lowering some tariffs on Chinese goods.

CNBC:

On Thursday, Trump attended an Oval Office meeting with Chinese Vice Premier Liu He and top U.S. officials as Beijing and Washington try to reduce trade tensions and fears of a possible trade war. The president's presence indicates the meetings are going well, and he pushed Liu to expand the list of sectors that could see tariff reductions, according to the official. Trump brought up areas including energy and natural gas.

On Friday, Trump's chief economic advisor Larry Kudlow told reporters the negotiations "are going well." He said Trump "was probably more optimistic yesterday on the subject than I've seen him in this whole process."

"China's come to trade, they're meeting many of our demands," Kudlow said. "There's no deal yet, to be sure, and it's going to probably take a while. It's a process. But they're coming to play. I believe they want to make a deal."

The economic advisor said he does not think there is a deadline to reach a deal.

While the Trump administration considers alleged intellectual property theft by Chinese companies a critical issue, the representatives have not resolved the problem yet, according to the senior administration official who declined to be named.

There was a false report (big surprise) last week that US trade advisor Peter Navarro would be excluded from the high level talks. According to Kudlow, Navarro attended the oval office meeting.

Trump's optimism was in contrast to his remarks on Thursday:

"Will that be successful? I tend to doubt it," the president said. "The reason I doubt it is because China has become very spoiled. The European Union has become very spoiled. Other countries have become very spoiled, because they always got 100 percent of whatever they wanted from the United States."

While that's clearly an exaggeration, enough progress has been made since those remarks to alter the president's perception.

Earlier reports suggested that China would buy $200 billion more in US products. It won't be that much. But surely China is wanting to significantly increase its purchases of American goods while relaxing some of their draconian rules that prevent US companies from competing in the Chinese market.

Both sides appear to have been spooked by the prospect of a trade war. This has spurred the US and China to redouble their efforts to come to an agreement that would avoid that.