The Chinese government and the Roman Catholic Church are seen to renew ties after five decades of separation.
The two heads of state are looking into the possibility of Vatican waiving its rights to select bishops from China. There are eight bishops that are awaiting nomination.
This also comes in conflict with the state-run Catholic institutions, but the final decision of Pope Francis is still pending.
According to sources from the Vatican, "Vatican negotiators aren't happy about the deal but consider it the best they can hope for at this time, according to people familiar with the matter. It would be a historic breakthrough from Rome's point of view since the Communist government would for the first time recognize the pope's jurisdiction as head of the Catholic Church in China."
Despite the issue, analysts believe that Chinese and Vatican relations are at a historic high. Last month, President Xi Jinping gave the pontiff a gift, symbolizing an improvement of ties between the two countries.
According to Pope Francis, "They're talking slowly, but slow things are good. Things that move fast aren't good. The Chinese people have my highest esteem."
"They have bridged the key disagreement over the appointment of bishops. Building diplomatic ties is just a matter of time," said Professor Edward I-hsin Chen at Taiwan's Tamkang University.
Chen added, "Beijing already used the Gambia as an example to show they won't worry about Taiwan's diplomacy under the new DPP government."
Jiang Shixue of the Institute of European Studies at the Chinese Academy of Social Sciences agreed with Chen.
He said, "There was a diplomatic truce between Beijing and Taipei during Ma Ying-jeou's presidency, but cross-strait relations have been more uncertain since [President Tsai Ing-wen] was sworn in. Xi's sending the gift says a lot about the warming ties with the Vatican."