In a recent high-level engagement in Switzerland, Chinese trade envoy Li Chenggang characterized the discussions with U.S. officials as “good,” signaling a potential easing of trade tensions. However, both nations have continued to exchange indirect criticisms.
Responding to a question from Finance Newso regarding the constructiveness of the dialogues, Li, who met with U.S. Trade Representative Jamieson Greer during the Asia-Pacific Economic Cooperation Trade Ministerial meeting in Jeju, affirmed that the talks were “definitely” productive, but refrained from revealing further details about future discussions.
Li also mentioned that he had no updates on any prospective meetings or telephone conversations between U.S. President Donald Trump and Chinese President Xi Jinping.
Earlier in the week, Trump suggested the possibility of speaking with Xi by week’s end, but there has been little information from Beijing on that possibility. Analysts regard direct dialogue between the two leaders as a likely indicator of significant advancements in trade discussions.
The Geneva talks marked an initial positive step for Beijing, as it viewed recent negotiations as a validation of its steadfast resistance to U.S. tariffs.
Both parties agreed to a temporary reduction of tariffs, allowing additional time for in-depth negotiations while establishing a “communication mechanism” dedicated to economic and trade issues.
This tariff reprieve has also improved China’s economic outlook, leading several economists to revise their growth forecasts for the year upward.
Lingering Tensions Persist
Despite the temporary ceasefire on tariffs, both nations have continued to hurl criticisms at one another in other sectors, highlighting the ongoing fragility of their relationship.
On Tuesday, the U.S. Commerce Department’s Bureau of Industry and Security issued a warning against the use of Huawei’s Ascent AI chips, drawing a rebuke from Beijing, which labeled the action as “abusing export control measures.”
The Chinese Ministry of Foreign Affairs intensified its rhetoric on Friday, condemning the U.S.’s “long-arm jurisdiction,” asserting that China will “never accept it.”
In addition, China is maintaining stringent controls over the export of critical minerals, viewing its supply of rare earth elements as a significant bargaining chip in its negotiations with the Trump administration.
In a related statement earlier this week, China’s Commerce Ministry urged regional authorities to clamp down on rare earth smuggling.
Following Trump’s implementation of “liberation day” tariffs on April 4, China began restricting exports of various rare earth metals as retaliation.
To export these materials, companies must secure approval from China’s commerce ministry. Reports indicate that at least four rare earth magnet producers—including some supplying German car manufacturer Volkswagen—have received such export permissions.
When queried about the export controls on rare earths during the regular press briefing on Thursday, a spokesperson from China’s Ministry of Commerce stated that they had no further information available.
Misjudging the Stakes of Rare Earths
Experts suggest that Beijing may be overestimating the significance of rare earth minerals to the U.S. administration. Dennis Wilder, a former senior White House intelligence advisor and now a senior fellow at Georgetown University’s Initiative for U.S.-China Dialogue on Global Issues, stated, “If China overplays this card, the United States will find other ways to secure rare earth elements,” pointing to Canada as a potential alternative source.
Additionally, Wilder noted that Chinese leadership seems to underestimate the urgency for stronger measures to combat fentanyl trafficking.
In a separate comment on Wednesday, Nicholas Burns, the former U.S. ambassador to Beijing, remarked that “there is going to be a price to pay” if China does not cooperate on the fentanyl issue.
The stakes are high for Beijing as economists like Neo Wang from Evercore ISI emphasize that China “has more to lose” if the tariff suspension does not continue, suggesting that Beijing is likely to attempt to “please Trump in a way that benefits the Republican party in the midterm elections next year.” This could involve commitments to increase U.S. goods purchases or investments in the U.S.
If Chinese officials conclude that a broader trade agreement is improbable, they may opt instead to prioritize resolving the 20% tariffs associated with fentanyl by making concessions on enforcement and the sale of TikTok in the U.S., which Wang identified as a particular focus for Trump.
— Finance Newso’s Evelyn Cheng contributed to this story.
