China and the United States wrapped up two days of high-level trade talks in London with an agreement “in principle to a framework” that each side will bring home for review by their top leaders.
“The two sides agreed in principle a framework for implementing the consensus” that Chinese President Xi Jinping and US President Donald Trump reached in their phone call last week, and the consensus of high-level bilateral negotiations in Geneva last month, China’s top trade negotiator Li Chenggang told reporters.
“The two sides will bring back a report to our respective leaders the talks in the meeting as well as the framework that was reached in Geneva. We hope that the progress that we made in this London meeting will be conducive to the increasing trust between China and the United States.”
Using similar language – “agreed in principle a framework” – US Commerce Secretary Howard Lutnick said his delegation was “going to go back and speak to President Trump and make sure he approves it”.
“They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework that we have worked hard over these last two days,” he said. “Both sides had extra impetus in order to get things done because we both have our presidents behind us, pushing us to make sure we take care of our respective sides.”
“The idea behind all of this is for us to increase our trade with China, right? ... The fundamental goal is to reduce the trade deficit and increase trade,” Lutnick added. “So this was the first step of the framework by which we will then approach and discuss growing trade.”
The talks are the latest bid to defuse tensions between the world’s two largest economies over an array of trade and technology issues, which remain at boiling point despite their agreeing to a temporary deal last month to scale back tariffs on each other’s goods.
The meeting in London came just days after a phone call between Xi and Trump, during which the leaders agreed to push forward with negotiations aimed at resolving their ongoing economic disputes.
China’s delegation was led by Vice-Premier He Lifeng. Lutnick, US Treasury Scott Bessent and Trade Representative Jamieson Greer led the US side in what was described as “the first meeting of the China-US economic and trade consultation mechanism”.
Tensions escalated dramatically in the days leading up to last week’s presidential phone call, with both sides accusing each other of violating the 90-day trade truce they had agreed to in Geneva in mid-May.
While Lutnick and Greer projected confidence that the framework would be approved and that they were on track to avoid a return to the full tariff levels that were in place before the Geneva meeting, Greer suggested that some differences would remain.
“We are very focused on implementing the Geneva agreement and the president’s consensus,” Greer said. “When that happens, that’s really going to unlock the ability to talk about more things. And again, there are some things that the Chinese and US economies, they just don’t fit together very well. Other things, maybe they do.”
The temporary trade truce between the US and China will end on August 12, unless the agreement reached in Geneva is extended. US tariffs on Chinese imports have fallen from as high as 145 per cent to 30 per cent, while Beijing’s duties on American imports have dropped from 125 per cent to 10 per cent.
Washington had placed new export curbs on sales of jet engine and chip design technologies to China, while growing increasingly alarmed by Beijing’s failure to speed up approvals for exports of rare earths.
Rare earths have become a central issue in the tussle between the rival powers, as China’s control over global supplies of a slew of critical minerals has given it significant leverage in dealings with the US.
Reducing America’s reliance on Chinese minerals was a major focus of a House Foreign Affairs Committee hearing on Tuesday, during which witnesses urged Washington to build up mineral supply chains with Southeast Asia through trade agreements.
“These agreements should include criteria for trusted critical mineral supply chains and guaranteed supplies of critical mineral resources for US industry,” said Barbara Weisel of the Carnegie Endowment for International Peace think tank, citing a US-Japan minerals agreement as a successful model.
Several countries in the Association of Southeast Asian Nations have “important critical minerals” and are interested in partnering with Washington, Weisel added.
Even so, the former assistant US trade representative for Southeast Asia and the Pacific cautioned that the US must send consistent signals, noting that a recent Commerce Department investigation into the national security implications of critical mineral imports had left countries in the region uneasy about the risk of new tariffs.
Meanwhile, China’s Ministry of Commerce on Saturday said it had approved several applications for exports of rare earths-related materials and was ready to deepen dialogue with other nations over its export control system.
Chinese authorities have reportedly granted temporary export licenses to rare earth suppliers serving the US’ top three carmakers, with some of the licenses valid for six months.
At a separate hearing in Washington on Tuesday, US Defence Secretary Pete Hegseth called sourcing critical minerals “a number one” priority for his team to ensure they are procured “in America first, and if not, then amongst allies”.
“China undercuts the market intentionally to try to corner the market, and we have to account for that,” Hegseth told a congressional hearing of the House Appropriations defence subcommittee.
The Pentagon chief’s remarks came in response to US congresswoman Susie Lee, a Nevada Democrat, who cited a New York Times report published on Monday saying the Defence Department had paid an Australian firm 10 times more than it paid Nevada-based MP Materials to secure critical minerals supplies.
According to the report, the Pentagon awarded MP Materials – operator of the only active US rare earth mine in Nevada – a US$35 million contract in 2022 to produce several rare earth elements, including samarium, which is subject to Chinese export restrictions.
Soon after, the Joe Biden administration provided US$351 million to Australia’s Lynas Rare Earths to build a processing facility in Texas.
“MP, the largest US rare earth producer, has invested US$1 billion of its own capital since 2020 and employs more than 800 Americans,” said Lee. “Yet it was undercut by an Australian firm that never even broke ground in the US.” - SOUTH CHINA MORNING POST
