A new round of trade negotiations between the United States and China is set to begin Monday in London as both sides try to preserve a fragile truce brokered last month. The fresh talks were announced last week after a long-anticipated phone call between US President Donald Trump and Chinese leader Xi Jinping, which appeared to ease tensions that erupted over the past month following a surprise agreement in Geneva. In May, the two sides agreed to drastically roll back tariffs on each other’s goods for an initial 90-day period. The mood was upbeat. However, sentiment soured quickly over two major sticking points: China’s control over so-called rare earths minerals and its access to semiconductor technology originating from the US. Beijing’s exports of rare earths and their related magnets are expected to take center stage at the London meeting. But experts say Beijing is unlikely to give up its strategic grip over the essential minerals, which are needed in a wide range of electronics, vehicles and defense systems. “China’s control over rare earth supply has become a calibrated yet assertive tool for strategic influence,” Robin Xing, Morgan Stanley’s chief China economist, wrote in a Monday research note. “Its near-monopoly of the supply chain means rare earths will remain a significant bargaining chip in trade negotiations.” Since the talks in Geneva, Trump has accused Beijing of effectively blocking the export of rare earths, announcing additional chip curbs and threatening to revoke the US visas of Chinese students. The moves have provoked backlash from China, which views Washington’s decisions as reneging on its trade promises. All eyes will be on whether both sides can come to a consensus in London on issues of fundamental importance. US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice Premier He Lifeng. On Saturday, Beijing appeared to send conciliatory signals. A spokesperson for China’s Commerce Ministry, which oversees the export controls, said it had “approved a certain number of compliant applications.” “China is willing to further enhance communication and dialogue with relevant countries regarding export controls to facilitate compliant trade,” the spokesperson said. Kevin Hassett, head of the National Economic Council at the White House, told CBS’s Face the Nation on Sunday that the US side would be looking to restore the flow of rare earth minerals. “Those exports of critical minerals have been getting released at a rate that is higher than it was, but not as high as we believe we agreed to in Geneva,” he said, adding that he is “very comfortable” with a trade deal being made after the talks. A valuable card to play In April, as tit-for-tat trade tension between the two countries escalated, China imposed a new licensing regime on seven rare earth minerals and several magnets, requiring exporters to seek approvals for each shipment and submit documentation to verify the intended end use of these materials. Following the trade truce negotiated in Geneva, the Trump administration expected China to lift restrictions on those minerals. But Beijing’s apparent slow-walking of approvals triggered deep frustration within the White House, CNN reported last month. Rare earths are a group of 17 elements that are more abundant than gold and can be found in many countries, including the United States. But they’re difficult, costly and environmentally polluting to extract and process. China controls 90% of global rare earth processing. Experts say it’s possible that Beijing may seek to use its leverage over rare earths to get Washington to ease its own export controls aimed at blocking China’s access to advanced US semiconductors and related technologies. The American Chamber of Commerce in China said on Friday that some Chinese suppliers of American companies have received six-month export licenses. Reuters also reported that suppliers of major American carmakers – including General Motors, Ford and Jeep-maker Stellantis – were granted temporary export licenses for a period of up to six months. While China may step up the pace of license approvals to cool the diplomatic temperature, global access to Chinese rare earth minerals will likely remain more restricted than it was before April, according to a Friday research note by Leah Fahy, a China economist and other experts at Capital Economics, a London-based consultancy. “Beijing had become more assertive in its use of export controls as tools to protect and cement its global position in strategic sectors, even before Trump hiked China tariffs this year,” the note said. China’s economic woes As China tackles a tariff war with the US head on, it’s clear that it is continuing to cause economic pain at home. Trade data released Monday painted a gloomy picture for the country’s export-reliant economy. Its overall overseas shipments rose by just 4.8% in May compared to the same month a year earlier, according to data released by China’s General Administration of Customs. It was a sharp slowdown from the 8.1% recorded in April, and lower than the estimate of 5.0% export growth from a Reuters poll of economists. Its exports to the US suffered a steep decline of 34.5%. The sharp monthly fall widened from a 21% drop in April and came despite the trade truce announced on May 12 that brought American tariffs on Chinese goods down from 145% to 30%. Still, Lü Daliang, a spokesperson for the customs department, talked up China’s economic strength, telling the state-run media Xinhua that China’s goods trade has demonstrated “resilience in the face of external challenges.” Meanwhile, deflationary pressures continue to stalk the world’s second-largest economy, according to data released separately on Monday by the National Bureau of Statistics (NBS). In May, China’s Consumer Price Index (CPI), a benchmark for measuring inflation, dropped 0.1% compared to the same month last year. Factory-gate deflation, measured by the Producer Price Index (PPI), worsened with a 3.3% decrease in May from a year earlier. Last month’s drop marks the sharpest year-on-year contraction in 22 months, according to NBS data. Dong Lijuan, chief statistician at the NBS, attributed the decline in producer prices, which measures the average change in prices received by producers of goods and services, to a drop in global oil and gas prices, as well as the decrease in prices for coal and other raw materials due to low cyclical demand. The high base of last year was cited as another reason for the decline, Dong said in a statement.
US and China set to kick off fresh round of trade talks in London over intractable issues
TruthLens AI Suggested Headline:
"US and China to Begin New Trade Talks in London Amid Ongoing Tensions"
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TruthLens AI Summary
A new round of trade negotiations between the United States and China is set to commence in London on Monday, as both nations aim to maintain a fragile truce established last month. The initiation of these talks follows a significant phone conversation between US President Donald Trump and Chinese President Xi Jinping, which appeared to alleviate tensions that had escalated in the preceding month after an unexpected agreement in Geneva. In May, both parties committed to significantly reducing tariffs on each other's goods for an initial period of 90 days, creating a sense of optimism. However, this positivity quickly deteriorated due to two primary contentious issues: China's control over rare earth minerals and its access to US-origin semiconductor technology. Experts predict that China's exports of rare earths, which are crucial for various electronic devices and defense systems, will be a focal point of discussion in London. Nevertheless, analysts believe that Beijing is unlikely to relinquish its strategic hold over these essential minerals, which serve as a significant bargaining chip in trade discussions. Morgan Stanley's chief China economist, Robin Xing, emphasized that China's near-monopoly over the rare earth supply chain gives it considerable leverage in negotiations.
In the lead-up to the talks, the Trump administration has expressed frustration over China's alleged obstruction of rare earth exports, coupled with new restrictions on semiconductor exports and threats to revoke visas for Chinese students in the US. Beijing has responded to these actions with its own critiques, perceiving them as violations of previously made trade commitments. As the US Treasury Secretary, Commerce Secretary, and Trade Representative prepare to meet with a Chinese delegation led by Vice Premier He Lifeng, the outcome of these discussions is pivotal. A spokesperson from China’s Commerce Ministry hinted at a willingness to improve communication regarding export controls, suggesting a potential thaw in relations. However, experts caution that while China may expedite license approvals for rare earth exports, overall access to these critical minerals is expected to remain more restricted than prior to April. Amid these trade tensions, China's economy is feeling the strain, with recent data revealing a significant decline in exports to the US and ongoing deflationary pressures affecting its economic landscape.
TruthLens AI Analysis
The article outlines the upcoming trade negotiations between the US and China, emphasizing the complexities and challenges faced by both nations. The focus on rare earth minerals and semiconductor technology serves as a backdrop to the discussions, highlighting the strategic importance of these resources in the global economy.
Strategic Context of the Negotiations
The trade talks are taking place in the context of a delicate truce, as both countries have previously agreed to roll back tariffs. However, underlying tensions persist, particularly concerning China's control of rare earth minerals and access to semiconductor technology. This indicates that while there may be a temporary easing of hostilities, fundamental disagreements remain unresolved.
Perception Management
The article aims to present an image of ongoing diplomatic efforts, portraying both nations as willing to engage in dialogue. By framing the discussions as a potential means to alleviate trade tensions, it seeks to cultivate a sense of hope among stakeholders, including investors and the public. This narrative can influence how people perceive the future of US-China relations and its impact on the global economy.
Possible Omissions
While the article discusses the negotiations, it may downplay the extent of the discord between the two nations. The implications of the US's actions, such as additional restrictions on technology exports, are briefly mentioned but not deeply explored. This could lead to a lack of understanding regarding the broader geopolitical context and the challenges that lie ahead.
Reliability of the Information
The news appears factual, presenting statements from key figures and expert opinions. However, the selective focus on certain aspects of the negotiations might skew the overall perception, leading to questions about the objectivity of the coverage. The reliance on expert commentary adds credibility, but it also highlights the potential for bias, particularly if the sources have vested interests.
Implications for the Future
The outcome of these negotiations could significantly impact various sectors, especially technology and manufacturing. A successful agreement might lead to a temporary stabilization of markets, while failure could exacerbate tensions and lead to further economic repercussions. The focus on rare earths indicates that supply chain dynamics will be central to discussions moving forward.
Target Audience
The article likely targets policymakers, investors, and industry experts interested in international trade and economics. By appealing to a broad audience concerned about the implications of US-China relations, it seeks to inform and engage those who may be affected by the outcomes of the talks.
Market Impact
Given the significance of trade relations between the US and China, the news could influence stock markets, particularly in sectors reliant on technology and manufacturing. Companies involved in rare earth production or semiconductor manufacturing may experience fluctuations based on the perceived outcomes of the negotiations.
Geopolitical Relevance
The discussions touch upon critical issues in the global balance of power, particularly regarding technology and resource control. The narrative reflects ongoing concerns about economic dominance and strategic competition, which are central to contemporary geopolitical dynamics.
Use of AI in Writing
There is no clear indication that AI was specifically employed in the writing of this article. However, certain language choices and framing could suggest an influence aimed at guiding reader perception, which is common in automated content generation.
The article serves to inform the public and stakeholders about the current state of US-China trade relations while subtly shaping perceptions of the negotiations' significance. The emphasis on rare earths and technology illustrates the complexity of the issues at hand, highlighting the potential for both cooperation and conflict.