International Business : China Says Talks With U.S. Advance : Trade: Deputy U.S. trade representative arrives in Beijing as sanctions deadline looms.

China and the United States made satisfactory progress toward averting a trade war as they raced against the clock to reach an accord before Sunday’s deadline for penalties, the New China News Agency said Wednesday.

The report came after U.S.-China talks over protection of copyrights, patents and trademarks in China moved to a higher level.

“Both Chinese and U.S. negotiators expressed their willingness here today to resolve their differences on intellectual property rights and reach an agreement as early as possible through more positive efforts,” the news agency said.

They agreed that the progress they have made in the last-ditch talks is satisfactory, it quoted a member of the Chinese delegation as saying.

A Chinese source close to the talks said an agreement could be in the offing after U.S. Deputy Trade Representative Charlene Barshefsky, who arrived in Beijing late Tuesday, met Sun Zhenyu, a vice minister of China’s Ministry of Foreign Trade and Economic Cooperation.

While Barshefsky’s meeting marked the shift of the talks to a higher gear, the ninth round of working-level talks since last June continued with just four days left before mutual sanctions go into force, U.S. Embassy officials said.

They refused to comment on the talks or to say whether any concrete progress had been made.

Barshefsky, who flew to Beijing to add weight to the negotiations, said the United States has been heartened by a recent string of Chinese actions to crack down on copyright violations. But she added that piracy remains rampant.

On Monday, the talks on protecting intellectual property in China focused on copyright verification, software piracy and customs controls. The talks began Feb. 14.

U.S. demands have included an end to copyright and patent violations through tougher law enforcement, creation of anti-piracy strike forces and quick, impartial court action.

In its propaganda blitz to show it can enforce existing anti-piracy laws, China hailed the effectiveness of a crackdown in the southern province of Guangdong, where many factories churn out bootleg laser discs, compact discs and computer software.

Last year, the booming province bordering Hong Kong introduced a system that requires licenses for all CD production lines to be re-examined and renewed and the authorities to conduct regular inspections, New China said.

The province introduced a copyright registration system in November, ruling that all work units must be registered before they implement contracts to reproduce or publish foreign video or audio products and foreign books, the agency said.

Among U.S. demands is that Beijing raid 29 plants in southern China that allegedly flood Asia with pirated laser and compact discs, as a down payment toward building a better environment for intellectual property protection.

Guangdong has redoubled its efforts to crack down on such counterfeiting, making progress, according to the news agency.

Since January, the province has inspected 5,218 shops and confiscated more than 166,000 pirated CDs, including 4,549 smuggled ones, and 39,585 copied video and audio tapes, it said.

The United States says piracy of U.S. patents, copyrights and trademarks in China costs U.S. industry nearly $1 billion a year. The government has ordered $1.08 billion in punitive tariffs on Chinese exports beginning Sunday if no deal is struck.

China has ordered retaliatory countermeasures if the U.S. sanctions are implemented.

Separately, an American business delegation continued to sign energy-related investment deals with the Chinese this week as part of a trade mission headed by U.S. Energy Secretary Hazel O’Leary.

The latest was reported by Texaco Inc., which said China plans to buy its coal-to-gas technology for nine plants that will produce fertilizer.

The agreement, to be signed Friday, will bring the number of Texaco-licensed plants in China to 23, said David Crikelair, vice president in charge of Texaco’s Alternate Energy group.

Crikelair would not disclose the value of the agreement but said it is a multimillion-dollar deal for the White Plains, N.Y.-based company.

The process will supply ammonia used in making more than 3 million tons of chemical fertilizer a year. China wants to boost fertilizer production under plans to make agricultural development a national economic priority this year.

Texaco’s gasification process allows for more efficient and cleaner use of coal, Crikelair said. Coal supplies about 75% of China’s energy.