China asks US to protect ‘hard-won’ results before Xi-Trump meeting

Xi and Trump are expected to sign off on the terms this week in South Korea when they sit down in person for the first time since the US president returned to power. That meeting could reveal details around issues such as China’s purchases of US soybeans, Washington’s plans for shipping fees on Chinese vessels and Beijing’s rare earth export controls.

“We expect the leaders to approve the deal, but whether it will bring lasting relief to markets is less clear — the new reality for US-China ties appears to be one of frequent ruptures and short-term fixes,” Chang Shu, David Qu and Jennifer Welch of Bloomberg Economics wrote in a note.

From Beijing’s perspective, fewer external uncertainties will buy policymakers’ time to focus on supporting the domestic economy and enhancing its tech sufficiency, they added. While Chinese industrial companies saw their earnings surge the most in nearly two years last month, the job market remains gloomy and a years long housing crash is lingering.

The People’s Daily commentary called on the US to stick to the trade and economic consultation mechanism led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Export curbs announced by US officials outside that framework have derailed the system several times in recent months, prompting Beijing to jam its rare earth supply chain that’s critical to American manufacturing.

Bessent said he believed China would delay its latest rare-earth restrictions “for a year while they reexamine it” after the latest talks. It had been unclear how Beijing would enforce its proposed curbs asserting control over any global shipment containing even a trace of certain rare metals from China, a move that had sparked outcry in Europe, too.

Another potential area for a quick win is the 20% fentanyl tariff the US has imposed on Beijing to pressure authorities into halting the flow of precursor chemicals used to make the deadly drug. Relief on that levy — which stacks on top of Liberation Day tariffs — could be a boon for the Asian nation at a time when domestic demand is weak.

China and the US have held five rounds of talks since Trump unveiled the highest US tariffs since the 1930s in April, which ended with Chinese exports to America facing a 55% levy. The People’s Daily piece said those talks were proof that neither nation wanted to decouple.

“The two sides should meet each other halfway, cherish outcomes of every dialogue and continuously build mutual trust and manage differences,” the publication said.

Despite the latest dovish language from both sides, global  investors are learning to embrace the new normal of “tension, escalation and truce,” Ting Lu, chief China economist at Nomura Holdings Inc. wrote in a Monday note.

“It’s good for the world’s top two largest economies to dial down tensions,” he added, “but we believe the superpower rivalry will likely escalate in the future.”