US, China edge toward fragile truce ahead of Trump-Xi meeting

The United States and China have reached a tentative framework to avert a renewed escalation in their long-running trade dispute, with both sides signaling readiness for compromise ahead of a planned meeting between the two countries’ top leaders.

US President Donald Trump and Chinese President Xi Jinping will meet face-to-face on the sidelines of the APEC Summit in South Korea on Thursday.

Following two days of intensive negotiations with Chinese Vice Premier He Lifeng in Kuala Lumpur, Malaysia, US Treasury Secretary Scott Bessent told NBC in an interview on October 26 that the Chinese side had agreed to resume soybean purchases from the US and to delay the proposed rare-earth export controls by one year.

When asked whether he was anticipating a 100% tariff on Chinese goods on November1, Bessent replied, “No, I’m not. And I’m also anticipating that we will get some kind of a deferral on the rare earth export controls that the Chinese had discussed.”

He added that Trump’s threat to impose a 100% tariff had given him “a great deal of negotiating leverage,” but that it is now old news.

“We’ve reached a very substantial framework that will avoid that and allow us to discuss many other things with the Chinese,” he said. “We will be able to discuss them, helping us get this terrible fentanyl crisis under control.”

He said the US and China will discuss Trump’s peace plan in Ukraine and Russia.

Separately, Bessent told CBS in an interview that the US and China had reached “a final deal on TikTok.” He said, “We reached one in Madrid, and I believe that as of today, all the details are ironed out, and that will be for the two leaders to consummate that transaction on Thursday in Korea.”

According to earlier media reports, TikTok’s American operations are expected to be sold to a consortium of US-based investors, with Oracle, Silver Lake Management and MGX likely among the leading participants. ByteDance, the Chinese parent company of TikTok, will reportedly grant a license to the American management team to control the algorithm, while retaining a limited minority interest in the newly structured US entity.

‘Playing Go’

Political tensions between the US and China have increased since the Chinese government announced plans to tighten export controls on key minerals on October 9. The decision prompted Trump to vow to impose an additional 100% tariff on Chinese goods, on top of the current 55% tariffs.

A few days later, Beijing softened its stance, saying that Washington had exaggerated the impact of China’s rare earths export controls. Trump also tried to de-escalate the situation by saying that Xi was having a “bad moment,” hinting that some Chinese bureaucrats had announced the export rules without considering their impact on the ongoing US-China trade negotiations.

“On the surface, it seems that the US has got all that it wanted,” says a Henan-based columnist using the pseudonym Little Flute. “Bessent could now present to domestic audiences that he successfully prevented the ‘worst-case scenario’ from happening.”

“But in fact, for China’s manufacturing sector, the removal of the extreme tariff threat effectively preserved export orders worth tens of billions of dollars,” he says.

The columnist points out that China has made headway in another crucial area, as the US agreed for the first time to establish a rapid communication mechanism for “specific technology export licenses.”

He says, while this mechanism does not represent any easing of the United States’ high-tech export restrictions, it will provide a basis for future dialogue and potential technical cooperation.

Citing economic observer Wang Shiming, Little Flutesays China and the US are like “two masters testing each other in the opening phase.” He saysthe real victory lies not in capturing pieces but in securing territory.

He admits that beneath the framework agreement lies a fragile equilibrium built on deep-seated differences. He says, “In semiconductors, artificial intelligence, and quantum computing, the iron curtain of technological competition still hangs low.”

China’s rare-earth card

Over the past week, some Chinese commentators have published articles raising doubts about China’s rare earths card.

A Fujian-based columnist, Chenkai, writes in an article published on October 26 that China’s rare earth export controls not only affect the US but also inadvertently hit Russia.

“The Russian government has repeatedly emphasized expanding its rare earth industry, from mining and refining to metal and magnet production, to reduce its dependence on China,” he says.“However, China’s new rare-earth export rules, which tighten controls on cross-border transfers, dual-use identification, and re-exports, will inevitably hit Russia.”

“Even with stable China-Russia relations, Russian buyers of Chinese heavy rare earths or key processes must now undergo additional scrutiny, resulting in higher compliance and time costs,” he says.

He adds thatRussianstate-owned enterprises led by Rosatom have used the Lovozero mine and the Solikamsk magnesium plant to form an integrated chain connectingthe upstream mining and midstream refining sectors. He says, Russia should, in the long run, focus on three areas to mitigate the impact:

• Joint R&D: Work with Chinese partners on extractant systems and crystallization control, trading “process know-how plus engineering teams” for sustainable capacity.
• Industrial platform: Upgrade the Solikamsk magnesium plant into a dual platform for pilot testing and industrial applications, prioritizing the separation of heavy rare-earth elements such as terbium and dysprosium.
• Integrated layout: Advance the Tomtor project toward a “mine-refinery-magnet” model at a single site to shorten logistics chains, simplify licensing, and reduce regulatory uncertainty associated with products containing Chinese components.

A Shandong-based writer named Yixing says China’s rare-earth card is unlikely to remain a long-term trump card against the US.

“The idea of treating rare earths as a ‘killer weapon’ in trade talks may be overly optimistic,” he writes. “China’s dominant position in the global rare earth industry has been declining.In the 1990s, China held over 70% of global reserves, but that figure has fallen to about 35% today.”

He says that as China’s electric vehicle and new-energy sectors continue to grow, the country will have to consume more rare-earth elements and import more rare-earth ores.

Last year, China imported 133,000 tons of rare-earth ores, with an import dependence of about 30%. Surprisingly, the US was China’s largest source of rare-earth imports, making up nearly 70% in 2022.

He says the US is building alternative supply chains with the help of Australia, Vietnam and Brazil, aiming to replace half of its Chinese imports by 2030.

While China leads in refining and separation, he says that firms in Japan and Germany still hold the top rare-earth patents, and that China supplies 85% of the raw materials for making high-performance permanent magnets but accounts for only 15% of global production capacity for the product.

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Follow Jeff Pao on Twitter at@jeffpao3