Trump angered Beijing in December by talking to the president of Taiwan and saying the United States did not have to stick to the policy, under which Washington acknowledges the Chinese position that there is only one China and Taiwan is part of it.

A White House statement said Trump and Chinese President Xi had a lengthy phone conversation on Thursday night, Washington time.

“President Trump agreed, at the request of President Xi, to honour our ‘one China’ policy,” the statement said.

Reaction from Taiwan was muted. A spokesman for President Tsai Ing-wen said in a statement it was in Taiwan’s interest to maintain good relations with the United States and China.

The U.S. and Chinese leaders had not spoken by telephone since Trump took office on Jan. 20. Diplomatic sources in Beijing say China had been nervous about Xi being left humiliated in the event a call with Trump went wrong and the details were leaked to the media.

Last week, U.S. ties with staunch ally Australia became strained after the Washington Post published details about an acrimonious phone call between Trump and Prime Minister Malcolm Turnbull.

No issue is more sensitive to Beijing than Taiwan. China and the United States also signalled that with the “one China” issue resolved, they could have more normal relations.

“Representatives of the United States and China will engage in discussions and negotiations on various issues of mutual interest,” the statement said.

In a separate statement read out on Chinese state television, Xi said China appreciated Trump’s upholding of the “one China” policy.

“I believe that the United States and China are cooperative partners, and through joint efforts we can push bilateral relations to a historic new high,” the statement quoted Xi as saying.

“The development of China and the United States absolutely can complement each other and advance together. Both sides absolutely can become very good cooperative partners,” Xi said.

Taiwan’s presidential office spokesman Alex Huang said in a statement that the island’s government and the United States “both maintain close contact and communication so as to keep a ‘zero accident’ approach” to their relationship.

“PAPER TIGER”

Lawyer James Zimmerman, the former head of the American Chamber of Commerce in China, said Trump should have never raised the “one China” policy in the first place.

“There is certainly a way of negotiating with the Chinese, but threats concerning fundamental, core interests are counterproductive from the get-go,” he said in an email.

“The end result is that Trump just confirmed to the world that he is a paper tiger, a ‘zhilaohu’ – someone that seems threatening but is wholly ineffectual and unable to stomach a challenge.”

Jia Qingguo, dean of the School of International Studies at Peking University and who has advised the government on foreign policy, said Trump had created a lot of uncertainty but was now back on track.

“Trump has reassured people that he will be a responsible president,” he told Reuters. “…This is good news for China, because stable U.S.-China relations are good for China. Now we can do business.”

The United States switched diplomatic recognition from Taiwan to China in 1979, but is also Taiwan’s biggest ally and arms supplier and is bound by legislation to provide the means to help the island defend itself.

Defeated Nationalist forces fled from China to Taiwan in 1949 after losing a civil war with the Communists. Beijing has never renounced the use of force to bring Taiwan under its control.

“EXTREMELY CORDIAL”

China wants cooperation with the United States on trade, investment, technology, energy and infrastructure, as well as strengthening coordination on international matters to jointly protect global peace and stability, Xi said in the statement.

The White House described the call, which came hours before Trump plays host to Japanese Prime Minister Shinzo Abe, as “extremely cordial”, with both leaders expressing best wishes to their peoples.

China has repeatedly said it has smooth contacts with the Trump team, led by China’s top diplomat, State Councillor Yang Jiechi.

Yang told Michael Flynn, Trump’s National Security Advisor, last week that China hoped it could work with the United States to control disputes and sensitive problems.

There was little or no mention in either the Chinese or U.S. statement of other contentious issues – trade and the disputed South China Sea – and neither matter has gone away.

A U.S. official told Reuters on Thursday that a U.S. Navy P-3 plane and a Chinese military aircraft came close to each other over the South China Sea, though the Navy believes the incident was inadvertent.

China on Friday reported an initial trade surplus of $51.35 billion for January, more than $21 billion of which was with the United States.

This story has been updated.