Though final decisions have not been made, US officials are preparing for such a scenario in case a planned Trump-Xi meeting yields no progress on the sidelines of a Group of 20 summit in Buenos Aires in November, according to the report.
The two leaders had a telephone call on Thursday, which Trump described as "long and very good", and said in a tweet that their discussions on trade were "moving along nicely".
"Positive comments from President Trump over US-China trade tension are cheering the market in the short term", said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.
Trump made no mention of whether the two leaders talked about the US indictment unveiled Thursday of two companies based in China and Taiwan accusing them of stealing trade secrets from a USA semiconductor company, Micron Technology Inc.
On Wednesday, US Secretary of State Mike Pompeo said China was probably Washington's biggest long-term security challenge and the United States was engaged in a "multi-pronged effort.to convince China to behave like a normal nation on commerce" and respect worldwide law.
Optimism for a possible trade deal between the world's two largest economies helped the yuan pare its loss over the past six months to 7.5 percent, and eased concerns that the Chinese currency would soon hit the psychological milestone of 7 per dollar for the first time since the global financial crisis.
Trump has imposed penalty tariffs of up to 25 per cent on $250 billion U.S. of Chinese goods in a dispute over Beijing's plans for state-led development of technology industries.
"China has been hurt over the last number of months".
Federal Bureau of Investigation director Christopher Wray said the US has filed a civil lawsuit seeking to prevent the two indicted companies, Taiwan-based United Microelectronics Corp. and China's state-owned Fujian Jinhua Integrated Circuit, from exporting any products created using USA trade secrets and blocking the further transfer of trade secrets.
Trump said earlier on Twitter that he and Xi had a "very good" conversation.
Tennessee Senator Lamar Alexander told the official the USA and China are competitors not adversaries and suggested they can prosper together.
Earlier on Thursday, Chinese Premier Li Keqiang told a group of visiting USA politicians that China and the United States could overcome their differences and get relations back on track if they worked together in a spirit of mutual respect.
Alexander said he would be discussing trade with Li, though neither of them mentioned the ongoing tariff war in remarks in front of reporters. "If President Trump makes an agreement with President Xi, there is nobody above them to overturn it", he said. "I don't think they're ready yet".