If the statements and actions of the US government are anything to go by, Mr Liu's optimism is well placed.

On Wednesday, US special textile negotiator David Spooner said: 'Our discussions this week have yielded substantial progress on a large number of issues. We look forward to meeting again soon.'

Compared with the sabre-rattling sanction talk of little more than two weeks ago, the tone of Mr Spooner's statement was warm to the point of affection.

And while the motivation for an agreement may have much to do with US President George Bush's upcoming visit to China on November 19, the US has not been slow to follow words with actions.

On Tuesday, the Committee for the Implementation of Textile Agreements, the US government body responsible for quotas on Chinese textiles, extended until next Tuesday its decision to impose quotas on four categories of Chinese textiles, namely non-knit shirts, skirts, pyjamas and swimwear.

In addition, the committee delayed a decision to impose a 12-month quota on Chinese socks in the face of strong lobbying from the US textile industry for protection from Chinese goods. Instead, it extended the US quota on Chinese socks, which expired last week, for the remaining months of this year.

This gave the US government time to conclude an agreement that would govern imports of Chinese textiles from 2006 to 2008, Mr Spooner said.

The international textile community has been calling for a Sino-US agreement similar to the Sino-EU textile agreement of June. Such an agreement regulating the trade for the next few years would create an orderly trading environment sorely needed by all players in the industry, including Hong Kong exporters, Chinese manufacturers and US retailers.

The current thaw in relations stands in stark contrast to the failure of the fourth Sino-US textile talks in Beijing last month.

Analysts blamed the failure of those talks on Mr Bush's unpopularity at home arising from the Iraq war, Hurricane Katrina and domestic political pressure on senior Bush associates Lewis Libby and Karl Rove.

The warming of US attitudes towards China, however, is going beyond the textile battle.

US Treasury Secretary John Snow last month was upbeat about China's moves to make a flexible yuan market, distancing himself from a Treasury report set to call China 'a currency manipulator'.

US Defence Secretary Donald Rumsfeld also took a softer line during his visit to China last month, backing Beijing's engagement policy with the US.

Ironically, North Korea - the US's rogue state migraine - may be at the heart of the increasingly cosy relationship.

Following the meeting between President Bush and President Hu Jintao in New York in September, Mr Hu promised Mr Bush that he would pressure North Korea to give up its nuclear weapons ambitions in the six-party North Korean nuclear talks scheduled to begin next Wednesday.

Mr Hu also told Mr Bush the Chinese government was prepared to take 'effective measures' to ease the huge US trade deficit with China by increasing imports of US goods, including big-ticket items such as Boeing aircraft.

In all events, the US needs China if it is to make any headway with North Korea.

But ultimately, the Sino-US love-in may have as much to do with the US recognising that many of its economic problems are its own rather than China's.

In August, US Federal Reserve chairman Alan Greenspan said a failure to encourage free trade with China could undermine US economic strength. It was trade protectionism and bloated budget deficits, not China, that posed the biggest risk to the long-term economic vitality of the US, Mr Greenspan warned.

Hopefully, Mr Bush has heeded the wise words of his outgoing Fed chairman and realised that the US economy and US jobs have more to gain from selling Boeings to China than restricting imports of Chinese bras.

Jake van der Kamp is on holiday