US President Donald Trump and South Korean President Lee Jae Myung finalised details of their fraught trade deal at a summit in South Korea on Wednesday, and the US president also sounded an optimistic note about a looming summit with China’s Xi Jinping.

“We made our deal, pretty much finalised it,“ Trump said at a dinner with Lee and other regional leaders on the sidelines of an Asia Pacific forum.

The allies unveiled a deal in late July under which Seoul would avoid the worst of US tariffs on its imports by agreeing to pump $350 billion of new investments into the United States in return for lower tariff rates.

But talks over the structure of those investments had been deadlocked and both sides had played down expectations for a deal during Trump’s visit.

“Prospects were not bright even last night, and there was dramatic progress on the day,” Kim Yong-beom, South Korea’s top presidential policy chief, told reporters, without providing further details.

Accord on investments in US

Trump and Lee agreed that Seoul can split its promised $350 billion investment fund into $200 billion in cash to be paid in instalments and capped at $20 billion per year, Lee’s aides said.

The other $150 billion is to be spent on investments in shipbuilding, which South Korea has promised to help Trump restore.

The South Koreans said the two sides agreed to split profits 50/50 before the initial investments are recouped, and to only pursue commercially viable projects.

US Commerce Secretary Howard Lutnick would head an investment committee to assess potential projects.

The White House did not immediately respond to a request for comment on the details of a Korea trade deal, which needs to be ratified by South Korea’s parliament.

Arriving from Tokyo hours after North Korea test-fired a nuclear-capable cruise missile, Trump was given a lavish welcome by Lee in Gyeongju, a historic city hosting this year’s Asia-Pacific Economic Cooperation forum.

His talks with Xi are set for Thursday in the port city of Busan.

Trump predicts good outcome from Xi talks

Speaking to reporters en route to South Korea, Trump dismissed the North Korean missile test and said he was squarely focused on his meeting with Xi, leader of the world’s second-largest economy.

“I think we’re going to have a very good outcome for our country and for the world, actually,” Trump said.

He added that he expects to reduce US tariffs on imports of Chinese goods in exchange for a commitment from Beijing to curb exports of fentanyl precursor chemicals.

The United States could halve the levies of 20% on Chinese goods it now charges in retaliation for the export of such chemicals, the Wall Street Journal said.

China’s foreign ministry said the meeting of the two leaders would “inject new momentum into the development of US-China relations”, and Beijing was ready to work together for “positive outcomes”.

Skipping the main APEC summit, Trump attended a dinner on Wednesday with Lee and other countries’ leaders.

He was due to meet Xi before departing on Thursday.

Negotiators from the world’s top two economies hashed out a framework on Sunday for a deal to pause steeper American tariffs and Chinese rare earths export controls, US officials said.

The news sent stocks to record peaks.

Beijing has been more circumspect about the prospect of an agreement, but in a possible sign of thawing, China bought its first cargoes of US soybeans in several months.

Extravagant welcome

Lee wooed Trump with gifts and praise, presenting him with a gold crown and the “Grand Order of Mugunghwa” medal, South Korea’s highest decoration.

At the start of a working lunch topped off with a “golden dessert”, Lee pledged to spend more on defence, seeking to head off a Trump concern that US allies are not pulling their weight militarily.

He also asked that the US allow the country to reprocess nuclear fuel to power submarines that could track North Korean and Chinese vessels for longer periods.

Seoul is barred from reprocessing without US consent, under a pact between the countries.

Trump pledged to help “straighten out” South Korea’s problems with its nuclear-armed northern neighbour.

The two are still technically at war after their 1950-53 war ended in an armistice, not a peace treaty.

Trump, who has repeatedly called for a meeting with reclusive North Korean leader Kim Jong Un to take place during this trip, said on Wednesday the timings would not work out.

Lee’s aide, Kim, said a factsheet on South Korea’s agreements with the US on security and trade would be ready within several days, while a memorandum of understanding that contains details of the trade agreement was close to completion.

In contrast to the official welcome, hundreds of protesters gathered near the summit venue for anti-Trump rallies and there were some scuffles with police.