US-China commerce talks in Malaysia ‘very constructive’ | USAEMALL.com

DELICATE BALANCE

Josh Lipsky, international economics chair at the Atlantic Council in Washington, said Bessent, Greer and He must first find a way to mitigate their dispute over US technology export curbs and China‘s rare earths controls, which Washington wants to reverse.

“I’m not sure the Chinese can agree to that. It’s the primary leverage that they have,” Lipsky said.

Some of those announcements may fall to Trump, who is due to arrive in the Malaysian capital on Sunday.

“We won’t know if Beijing has successfully counterbalanced the US’s export controls with restrictions of their own or if they’ve induced a continuation of an escalatory spiral until Trump and Xi meet,” said Scott Kennedy, a China economics expert at Washington’s Center for Strategic and International Studies.

“If they make a deal, their gambit will have paid off. If there’s no deal, then everyone will need to prepare for things to get much nastier.”

RARE EARTHS STRANGLEHOLD

The world’s two largest economies are seeking to avoid a return of their tariff escalation to triple-digit levels on both sides.

Bessent and Greer’s first meeting with He in Geneva in May led to a 90-day truce, which brought down tariffs sharply to about 55 per cent on the US side and 30 per cent on the Chinese side and restarted the flow of magnets. 

It was extended in subsequent talks in London and Stockholm and was due to expire on Nov 10.

But the delicate truce frayed at the end of September, when the US Commerce Department vastly expanded an export blacklist to automatically include firms more than 50 per cent owned by companies already on the list, banning US exports to thousands more Chinese firms.

China struck back with the new global rare earth export controls on Oct 10, aiming to prevent their use in military systems.

Bessent and Greer blasted China‘s move as a “global supply chain power grab” and vowed the US and its allies would not accept the restrictions. 

Reuters reported that the Trump administration is considering a plan to up the ante with curbs on a dizzying array of software-powered exports to China, from laptops to jet engines.

The Trump administration added to the tension on Friday by announcing a new tariff probe into China‘s “apparent failure” to meet the terms of the 2020 US-China “Phase One” trade agreement that halted their trade war during Trump’s first term.