During his meetings in Beijing in June, US Secretary of State Antony Blinken proposed creating a working group with China to start discussions on a potential deal, the report said.
The deal would entail lifting sanctions on a Chinese police forensics institute that is accused by Washington of human rights abuses.
The State Department, however, has recently denied media reports that any offers to lift sanctions were made during Blinken’s recent trip to China.
According to the media, Chinese officials "haven’t agreed to anything yet," and the Biden administration is "stalled on where to go."
China continues to stand firm that any dialogue on drugs will be possible only after the sanctions are lifted and the police institute removed from the US export blacklist, the report stated.
Beijing abandoned cooperation with the United States on narcotics a year ago due to then-House Speaker Nancy Pelosi's controversial trip to Taiwan, which brought bilateral relations to an all-time low.