Beijing
—
As the dust begins to clear over Thursday’s nearly two-hour meeting between Chinese President Xi Jinping and President Donald Trump at an air base in South Korea, it is clear that China’s leadership has racked up another victory in its tough strategy with the United States.
The talks did not secure a broad trade deal, but rather a return to an uneasy ceasefire built on several agreements aimed at stabilizing relations as the two countries move toward unity.
President Xi has promised to cut by 10% the 30% tariffs that President Trump imposed on new Chinese goods this year in exchange for stepping up efforts to control China’s role in the U.S. fentanyl crisis. He also secured a U.S. agreement to suspend new rules that would significantly expand the number of Chinese companies blacklisted from purchasing sensitive U.S. technology.
President Trump has prevented Beijing from imposing a series of expanded restrictions that could cripple global industries that depend on China’s rare earth minerals. China will also increase purchases of U.S. soybeans and other agricultural products, U.S. officials said. The two sides will also suspend port toll increases targeting each other’s shipping sectors and extend the truce against further increases in customs duties.
On paper, this looks like a reasonable exchange, at least for now, that seems to deliver what the two leaders (and the broader global economy) had hoped for: stability after a tumultuous year of sparring between the world’s business heavyweights.
But for China, the agreement, accompanied by President Trump’s glowing praise of Xi Jinping, is clear confirmation of the success of its strategy in how to deal with Trump 2.0.
That’s because while the Chinese government has been able to win valuable concessions on tariffs and export controls, it has mostly conceded to measures that were only introduced in the first place as retaliation from the United States.
Take for example soybeans, a major U.S. export, and China’s purchases of soybeans have plummeted this year due to trade tensions.
U.S. Agriculture Secretary Brooke Rollins said after the meeting that China had agreed to buy at least 25 million tons of U.S. soybeans annually for the next three years.
But that threshold is still 1.8 million tonnes less than China bought soybeans last year before the tensions, according to US data.
China’s highly nationalistic and censor-controlled internet chronicled the whole situation on Friday, with social media commenters praising “China for getting away with this tariff war really well” and saying, “President Trump has finally addressed the mess he caused.”
The outlook is far from rosy for China.
Although tariffs due to the U.S. trade dispute were lowered to 20% this year, Chinese exporters still face tariffs on their products of nearly 50% on average, when existing tariffs are taken into account. That tax rate remains one of the highest the United States imposes on any country. Meanwhile, the U.S. government has made substantial progress toward its goal of reducing the trade deficit.
And although no deal has been struck yet, the Chinese government may have made a real concession on the fate of social media app TikTok, changing its tune after expressing adamant opposition to a U.S. law that would force the app’s Chinese owner, ByteDance, to sell its U.S. operations.
China also remains blocked from accessing top-of-the-line American chips, a key weapon in the high-stakes AI race between the two countries.
But on the technology front, Chinese companies have been greatly benefited by the government’s ability to postpone for at least a year new U.S. rules that would have significantly expanded the number of Chinese companies blacklisted from purchasing sensitive U.S. technology.
U.S. efforts to close the loophole, now suspended, may have trapped about 20,000 more companies than are already on the list, according to an analysis by business intelligence firm Wirescreen.
This is another victory for Beijing’s strategy to use its near-total control over the global rare earth supply chain as leverage against the United States. This strategy was also deployed during the tariff hike earlier this year.
On the Chinese side, the agreement to postpone for at least a year the expansion of export controls for rare earth minerals announced in retaliation for the US blacklist expansion is unlikely to be seen as a major setback for Beijing.
One China scholar, foreign policy analyst Shen Dingli, told CNN earlier this month that these measures were a “nuclear” option that Beijing knew was not symmetrical, “but if China doesn’t use this weapon, it leaves little room for negotiation.”
The next big question will be whether Mr. Xi and Mr. Trump can maintain detente ahead of a broader agreement and a planned visit between the two countries in 2026.
After all, Canada knows firsthand that the trade cease-fire it signed with President Trump could quickly fall apart.
A variety of foreseeable and unforeseen pitfalls in the growing competition between the United States and China could derail the newly achieved stability, and any agreement ultimately reached is unlikely to address the deep structural problems between the two countries.
But as President Trump took off from South Korea’s Gimhae International Airport on Thursday to return to the United States, which is mired in a quagmire of frozen government, President Xi stayed behind to attend an international summit and promote China as a bellwether of globalization, making it clear that the balance of power between the two countries has shifted.
