The United States and China are in a critical phase in their drawn-out talks on the level of U.N. punishment against North Korea for its nuclear and missile provocations, government sources here said Sunday.

"The two sides have made considerable progress in core contents" of the envisioned U.N. resolution, a source said, requesting anonymity.

South Korean officials expect a draft resolution to be circulated to the other members of the U.N. Security Council within this week.

But they remain cautious about when a resolution will be adopted.

"Nothing is agreed until everything is agreed," an official pointed out.

The international community has reached a consensus on the need for a strong resolution to punish Pyongyang for its Jan. 6 nuclear test and a long-range rocket launch a month later, both are in clear violation of existing U.N. resolutions on the North.

The U.S. has pushed for tough additional sanctions. China has been opposed to the sanctions-only drive, emphasizing the importance of leaving the door open for dialogue.

As the two sides narrowed differences to some extent, this week could be a watershed for efforts to reach a deal, said another source. (Yonhap)