The Chinese envoy to the fresh Iranian nuclear talks said here on Tuesday that a compromise is crucial for a final deal by the July 20 deadline.

Wang Qun, China's envoy to the talks and Director-General of the Department of Arms Control of the Ministry of Foreign Affairs of China, told reporters a compromise is crucial and Iran's uranium capacity would be the core issue in the talks.

Iran and the so-called P5+1 group, five permanent members of the United Nations Security Council plus Germany, are engaging in the fifth round of nuclear negotiations in the capital city of Austria during the FIFA's World Cup games in Brazil.

"There are winners and losers in football matches. For negotiations, compromises and win-win situations are more important," Wang said, adding political courage and decisiveness are needed for "scoring a goal" when necessary, if all sides are to strike a comprehensive deal by the deadline.

When asked about Iran's redesigning of the Arak nuclear reactor which would lower the plutonium output, Wang said the modification shows Iran's good faith in resolving the issue.

Iran's Arak nuclear reactor could yield plutonium which could be used to produce nuclear weapons. To address western's concern, Tehran said they would significantly lower the plutonium output by redesigning the reactor to cut the nuclear fuel capacity.

Based on the interim deal reached in Geneva last November, Iran would suspend some controversial nuclear activities in 6-month period in exchange for relevant sanctions relief from the West.

Tehran and the six major countries are striving to make a comprehensive deal by July 20, the deadline of the Geneva agreement, to end the decade-old dispute over Tehran's nuclear program.

Western states fear Iran would covertly make a nuclear bomb, asking Iran to significantly scale back its nuclear plan to rule out a "breakout possibility" when providing more transparency, but Iran denies the allegation, insisting it has the inalienable right to develop peaceful nuclear plan.

There are still big gaps in the talks concerning Iran's nuclear fuel production capacity. Iran wants to develop its uranium enrichment capability to fuel more nuclear plants to generate electricity in the future. However, western states could not accept this demand.

French Foreign Minister Laurent Fabius last week said the negotiations had "hit a wall." He told French media that there were deep divisions over the number of uranium centrifuges that Tehran will be able to hold on to under an agreement.

"We say that there can be a few hundred centrifuges, but the Iranians want hundreds of thousands, so we're not in the same framework," Fabius said.

Iran had held bilateral meetings with the United States, France, Russia and Germany before the talks in Vienna, saying these meetings were important for the Vienna talks.

A senior U.S. official said late Monday that a top U.S. State Department official discussed the crisis in Iraq with the Iranian side in Vienna, the most direct talks yet between the two sides on this issue.

"We are open to engaging the Iranians, just as we are engaging other regional players on the threat posed by ISIL in Iraq. These engagements will not include military coordination or strategic determinations about Iraq's future over the heads of the Iraqi people," the senior U.S. official said in a statement.

U.S. Deputy Secretary of State Bill Burns is among the U.S. officials taking part in the fifth round of Iranian nuclear talks.