China’s exports likely fell at a slightly faster pace in September as softening global demand and US tariffs bit more deeply, while imports shrank for a fifth straight month, suggesting pressure on the economy is increasing, a Reuters poll showed.

Fitch Ratings said in a recent report that it expected export-oriented Chinese technology companies to remain under pressure as customers moved their supply chains away from China.

More US tariff measures against China are set to take effect on Oct.15 and Dec.15, unless the two sides can agree on to de-escalate their protracted trade war in negotiations in Washington this week.

Hopes are growing for a partial deal that would at least delay a planned US tariff increase next week. But even then, earlier ceasefires didn’t last long and existing tit-for-tat duties are likely to remain in place, maintaining pressure on manufacturers.

China’s September exports are expected to have fallen 3% from a year earlier, according to the median estimate of 28 economists in the poll, worsening from a 1% drop in August.

Last month marked yet another escalation in the Sino-US trade dispute, with Washington starting to collect 15% tariffs on more than $125 billion in Chinese imports from Sept.1, while Beijing hit back with retaliatory levies.

Analysts largely attributed the gloomy forecast for Chinese exports to weakening global demand and the fading of the so-called “front-loading effect”. Some Chinese companies had rushed to ship goods to the United States ahead of the September deadline, supporting headline export readings in July and August.

Imports, meanwhile, are likely to remain in contraction, shrinking 5.2% from a year earlier, versus a 5.6% decline in August, the poll showed.

The forecast pointed to still softening domestic demand, as more than a year of stimulus measures have failed to put a floor under sliding economic growth.

“The recent slowdown in imports can only be partly explained by lower commodity prices. Indeed, imports of high-tech products and other goods have slowed even more sharply than those of major industrial commodities,” said analysts with Capital Economics.

Analysts expect economic growth could cool further this quarter from a near 30-year low of 6.2% hit in April-June, and say more policy support is needed, especially if US tariffs proceed and cover virtually all remaining Chinese imports in coming months.

“Assuming no trade deal and all announced tariff hikes take place, we see GDP growth slowing further in Q4 and next Q1 before a modest rebound in Q2, bringing 2020 GDP growth to 5.5%,” said UBS analysts in a research note.

Top US and Chinese negotiators met on Thursday for the first time since late July to try to ease a bitter 15-month trade war and business groups expressed optimism that they might be able to find enough common ground to delay a US tariff hike scheduled for next week.

Lower-level “early harvest” agreements on issues such as currencies and copyright protections were possible despite increased irritants between the world’s two largest economies, a US Chamber of Commerce official briefed by both sides said.

Myron Brilliant, the Chamber’s head of international affairs, told reporters that negotiators were “trying to find a path towards the bigger deal” with progress on market access and less controversial intellectual property and other issues.

“I believe that there’s even the possibility of a currency agreement this week. I think that could lead to a decision by the US administration to not put forth a tariff rate hike on Oct.15.”

US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer greeted Liu on the steps of the USTR office near the White House on Thursday morning. Negotiations continued over lunch.

Steady escalations of the tit-for-tat tariffs on Chinese and US goods have roiled financial markets and stoked fears of a global recession.

Stocks rose on optimism that talks would yield at least a partial truce, with the S&P 500 up 0.65% and the Nasdaq up 0.6%.

The mood surrounding the talks had soured earlier this week when the US government blacklisted 28 Chinese public security bureaus, technology and surveillance firms, including video surveillance gear maker Hikvision., over allegations of abuses of Muslim minorities in China.

Washington also restricted visas for certain Chinese officials over the same issue and Beijing was said to be planning to tighten visa restrictions for US nationals with ties to anti-China groups.

But Chinese officials indicated more willingness to negotiate and avoid further escalation, according to Chinese state media reports.

“The Chinese side came with great sincerity, willing to cooperate with the US on the trade balance, market access and investor protection,” Xinhua quoted Liu as saying on Thursday.

The US Agriculture Department said on Thursday that private exporters reported a snap sale of 398,000 tonnes of soyabeans to China, part of a flurry of purchases the top buyer of the oilseed has made since granting tariff waivers to some importers to buy US soya as a goodwill gesture.

USDA also reported record-large sales of pork, including 18,810 tonnes for shipment this year and 123,362 tonnes for shipment in 2020.

The two sides have been at loggerheads over US demands that China improve protections of American intellectual property, end cyber theft and the forced transfer of technology to Chinese firms, curb industrial subsidies and increase US companies’ access to largely closed Chinese markets.

The discussions were not expected to address the most contentious issues in the talks, leaving them for a possible future negotiations.

Brilliant, the US Chamber official, said that the intellectual property issues under discussions were largely “20th century IP protections” involving copyright and trademark infringement, not those to protect data flows, computer source code and commercial data.

A currency agreement would likely follow one that was largely agreed in February by Washington and Beijing that would parallel China’s prior G20 pledges to avoid currency manipulation to gain a trade advantage, said Craig Allen, president of the US-China Business Council

“It’s time to roll that thing out,” said Allen, who also met with Liu on Wednesday. “It would be a positive, and would make it easier for the US side to sign a deal.”

Reuters