Monday in London marks the start of a fresh round of negotiations meant to help the US and China to mend their trade spat.
Senior US delegates including Commerce Secretary Howard Lutnick will meet with Chinese officials including Vice Premier He Lifeng to help to ease tensions between the two biggest economies, so endangering world growth.
High on the agenda are Chinese exports of rare earths, which are vital for modern technology, and Beijing’s access to US goods, especially computer chips.
Washington and Beijing reached a temporary truce over trade issues last month, but each nation has since claimed the other broke the agreement.
Following a phone discussion last week between Donald Trump and China’s leader Xi Jinping, which the US President praised as a “very good talk,” the next round of negotiations starts.
The first between the two leaders since the trade war broke out in February, Trump remarked: “resulted in a very positive conclusion for both countries”.
Chinese official news agency Xinhua claims that Xi informed Trump the US should “withdraw the negative measures it has taken against China”.
Although last month’s Geneva negotiations lowered tariffs, they did not address a number of other concerns including Chinese shipments of rare earth metals and magnets, which are vital for making everything from smartphones to electric cars.
Washington has meantime limited China’s access to US products like semiconductors and other associated technologies connected to artificial intelligence (AI).
According to Swetha Ramachandran, fund manager at Artemis, including Lutnick in this week’s meetings with China is “a welcome addition” since he is “behind some of the very harsh export controls of technology to China”.
“I think there are enough chips on the table here that could make it acceptable for both sides to walk away with desired outcomes; they mine 69% of the rare earths globally that are quite essential for technology development in the US.”
Along with Lutnick, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet Chinese authorities in London.
China suffered most when Trump declared broad tariffs on goods from many nations early this year. Beijing replied with own increased tariffs on US imports, which set off tit-for–tat hikes peaked at 145%.
Talks in Switzerland in May resulted in a temporary truce labeled a “total reset” by Trump.
Beijing vowed to remove restrictions on important resource exports and cut levies on US imports to 10% while US tariffs on Chinese goods were dropped to 30%. It provided both sides a ninety-day window to try to negotiate a trade agreement.
The US and China have subsequently claimed violations of non-tariff agreements, nevertheless.
Greer claimed China has not reversed policies limiting rare earth magnet exports.
Beijing claimed US violations of the accord included halting sales of computer chip design software to Chinese companies, warning against using chips made by Chinese tech giant Huawei and revoking visas for Chinese students.
From a prior estimate of 3.1%, the Organization for Economic Co-operation and Development stated it now expected worldwide economic growth to be a “modest” 2.9%.
It blamed a “significant” increase in trade barriers and cautioned that “weakened economic prospects will be felt around the world, with almost no exception”.
Monday’s fresh Bejing data revealed that China’s May exports fell short of predictions.
Dollar-wise, China’s exports grew by 4.8% over last year’s same period.
Simultaneously, imports fell by 3.4%, far lower than the 0.9% decline expected.
