US Treasury Secretary Scott Bessent announced on Wednesday that Washington and Beijing have agreed to extend the trade agreement reached in South Korea for just two months, as Chinese President Xi Jinping arrives in Washington for a state visit.
“We have agreed today that we will extend what we call the Busan Agreement,” Bessent said in an interview with Fox News, adding the agreement will be extended for two months until January 10.
Bessent made the remarks hours after an unscheduled meeting with Chinese Vice-Premier He Lifeng at the World Bank headquarters in Washington, following their earlier engagement on Sunday at JPMorgan’s offices in New York.
The South China Morning Post reported in August that the Busan trade agreement was likely to be extended, but the two sides differed on the truce’s duration.
Beijing preferred an extension through the end of Trump’s presidency while Washington sought a shorter-term deal. The one-year agreement expires on November 10.
Bessent added that a shorter extension would give the US time to assess whether China was meeting its commitments.
“There are some deliverables that have not been perfect on the Chinese side,” he said. “So, we also want to see now that we’ve sat down and told them our expectations to see if over the coming months they could be a bit more fulsome in enacting the agreement.”
Washington has repeatedly raised concerns about inadequate flows of rare earths from China, saying Beijing needs to step up approvals for the strategic mineral exports.
China’s shipments of rare earth magnets to the US fell 13 per cent year on year to 512 tonnes in August.
Earlier in the day, Bessent said that Washington was also ready to sign on to China’s proposal of a more expansive agreement on trade.
“The Chinese on Sunday came up with the idea of a bigger deal,” Bessent said.
The comments stand in sharp contrast to US Trade Representative (USTR) Jamieson Greer’s remarks on Monday, when he ruled out announcing an extension of the Busan agreement during the Trump-Xi summit.
After eight hours of negotiations in New York, the two sides agreed to launch a dialogue on artificial intelligence (AI) and set in motion a bilateral trade body. Greer also attended Sunday’s meeting.
Bessent’s remarks on Wednesday point to differing views within the US administration on the trade agreement with China.
A source close to the discussion said the US side, especially the USTR, focused on the narrow trade mechanism of the US-China Board of Trade, where both sides select non-sensitive sectors and products capped at US$30 billion each for tariff reduction.
Chinese delegation sought broader trade agreement
Another source said that China’s “bigger deal” proposal seems like a “new idea” as the US side “wouldn’t have had the bandwidth to discuss it earlier”.
The source suggested that Beijing had probably been working on the proposal and unveiled it only last weekend, with He remaining in Washington to work through the substantive details.
The truce reached in Busan, South Korea, in October helped avert a full-blown crisis triggered by Trump’s “Liberation Day” tariffs in April last year.
At the time, the two sides agreed to lower US tariffs on some Chinese goods; pause additional US restrictions and certain Chinese rare earth export controls; and secure Chinese commitments on US soybeans and fentanyl precursors.
The second Bessent-He meeting comes as uncertainty remains over the presence of Chinese businesses in Xi’s delegation.
The SCMP reported on Tuesday that differences between Washington and Beijing over potential investment announcements are creating roadblocks for a Chinese business delegation potentially accompanying Xi.
A source familiar with the discussions said Washington and Beijing had yet to resolve their disagreements over the Board of Investment, particularly over possible Chinese investments in the US, adding to uncertainty over the delegation’s participation.
The investment forum was an outcome of Xi and Trump’s last summit in Beijing in May.
On AI dialogue, the Treasury secretary said that Beijing is “very eager” to engage with Washington on the technology.
“We are working to define with them what we think the most important or the most perilous risk factors are, whether it’s uncontrolled AI agents, whether it is non-state actors using AI, either for cyber ops or for biologics,” he added.
However, he noted that the reported “AI hotline” is still “yet to be determined.”
Bessent reveals two sides will meet again at Apec summit in Shenzhen
Bessent revealed on Monday that the two sides had agreed to meet again in Shenzhen, likely in two months, on the sidelines of the Asia-Pacific Economic Cooperation (Apec) summit.
As the two sides move to formalise the AI dialogue, Senate Democrats on Wednesday urged the Trump administration to pair any cooperation with Beijing on AI safety with tighter restrictions on China’s access to advanced US chips and chipmaking equipment.
Senate Democratic leader Chuck Schumer argued that the two goals were not contradictory, saying restrictions on advanced chips would preserve Washington’s technological advantage while giving it greater leverage to persuade Beijing to accept international AI safeguards.
“If we stop them from buying these chips ... we will have greater bargaining power over them,” Schumer said, adding that China would then be more likely to join efforts to impose AI guardrails worldwide.
Senator Elizabeth Warren also took aim at the role of US technology executives in shaping China policy, singling out Nvidia chief executive Jensen Huang, who is among the American business leaders expected to attend Thursday’s state dinner. “Mr Huang should be nowhere near the negotiating table during President Xi’s visit,” Warren said.
The senators called for passage of three bipartisan measures – the AI Overwatch Act, MATCH Act and Chip Security Act – that would tighten controls on advanced AI chips and chipmaking equipment and require tracking technology on some chips exported through third countries. -- SOUTH CHINA MORNING POST
