Agreement will prove beneficial to both.
The European Union and China are reportedly settling their long-running telecoms dispute later this month.
The EU launched an investigation in May 2013 into the alleged violation of anti-dumping and anti-subsidy guidelines by Chinese telecom firms ZTE and Huawei.
The EU has now agreed to end the probe into the alleged illegal subsidies being given by the Chinese Government to its companies if China offers concessions, reported Reuters.
The subsidies given by the Chinese Government helped the companies sell their products at 18% less than those of EU telecom equipment manufacturers.
A person close to the talks told the news agency: "The two parties have reached a common understanding on all the four issues and they are looking to cut a final deal."
As part of the deal, China is likely to confine export credits to the telecoms equipment makers.
In addition to monitoring market share of Chinese telecom firms in Europe and vice versa, both sides may also join forces on industrial research and standardisation in the sector.
There are also reports that EU trade commissioner Karel De Gucht desires to settle the issue before the completion of his tenure on 31 October.
Another source told Reuters: "This investigation was De Gucht’s issue. He doesn’t want to leave this with his successor."
If the deal turns out to be unsuccessful, the EU may launch an anti-subsidy process and impose disciplinary levies on exports of Chinese telecom equipment.
The US House of Representatives’ Intelligence Committee also prohibited both the firms from doing business in the US market, over fears of security threat to the country.