UPDATE 1-China's Xi tells Trump he welcomes Phase 1 trade deal

(Updates with signing of Phase 1 deal in paragraph 2, comments from Chinese Vice Premier Liu in paragraphs 4-6)

BEIJING, Jan 16 (Reuters) - Chinese President Xi Jinping told U.S. President Donald Trump in a letter that he welcomes the Phase 1 trade deal reached with the United States and that he is willing to stay in close touch with the American leader.

Trump and Chinese Vice Premier Liu He signed the Phase 1 trade deal on Wednesday in Washington, de-escalating the 18-month bilateral dispute that stokes fears of a global recession. China committed to purchases of at least an additional $200 billion in U.S. goods and services over two years, while the United States has suspended or reducing some tariffs on Chinese goods.

Xi told Trump in the letter, read by Liu during the signing ceremony, that the deal shows how the two countries can resolve their differences and find solutions based on dialogue.

Liu, China’s top negotiator in the trade talks with the United States, also said separately during the ceremony that China will abide by the commitments it made in the Phase 1 deal and that the agreement is good for both countries and the world.

“In this deal, according to China’s domestic market demand, Chinese companies will buy $40 billion in U.S. agriculture products annually over the next two years based on market conditions,” Liu said, adding that both Chinese and U.S. governments should create favorable market environment for such purchases.

“Of course, when the market demand is booming, Chinese companies may buy more,” he said. (Reporting by Stella Qiu and Se Young Lee Editing by Paul Simao and Jonathan Oatis)