'Xi Jinping sees Donald Trump as a gift that keeps on giving', expert says • FRANCE 24 English

Key Concepts

• Trade Talks: Negotiations between countries regarding trade policies, tariffs, and agreements.
• Tariffs: Taxes imposed on imported goods.
• Trade Truce/Ceasefire: A temporary suspension of trade hostilities, often involving the rollback or pause of tariffs.
• Rare Earth Minerals: A group of 17 elements crucial for high-tech industries, with China holding a dominant position in their supply chain.
• Fentanyl: A synthetic opioid responsible for a significant number of deaths in the US, with US-China cooperation on its production being a point of discussion.
• Taiwan: A self-ruled island that is a point of contention between the US and China, with US law obligating defense support.
• Subsidized Overcapacity: A situation where a country produces more goods than the market demands due to government subsidies, leading to unfair competition.
• Currency Issues: Disagreements over exchange rates and monetary policies between countries.
• Strategic Competition: Rivalry between nations for dominance in specific regions or technological sectors.
• Western Hemisphere: The Americas (North, Central, and South America).
• Asia-Pacific: The geographical region encompassing East Asia, Southeast Asia, and Oceania.

US-China Trade Talks and Potential Deal

On the eve of crucial trade talks in South Korea, US President Donald Trump expressed optimism about reaching a deal with Chinese President Xi Jinping. Global markets are closely monitoring these discussions, which could determine whether the two largest economies extend their fragile trade truce or revert to economic hostility.

Trump's Optimism and Stated Goals

President Trump has been actively engaging with allies in Asia, but his meeting with Xi Jinping is considered his most significant challenge. He stated, "Tomorrow morning is the one that most people find most interesting and I think we're going to have a great meeting with President Xi of China and a lot of problems are going to be solved." He further emphasized his optimism, saying, "The relationship with China is very good. So I think we're going to have a very good outcome for our country and for the world actually. I think it's important for the world."

Stakes and Potential Consequences

The two sides are under pressure to extend their trade ceasefire, which is set to expire in November. A collapse in talks could lead to both nations reimposing tariffs exceeding 100%, a level US Treasury Secretary Scott Bessant once likened to a trade embargo.

Key Issues on the Table

• Rare Earth Minerals: Tensions escalated when Beijing proposed new curbs on rare earth mineral exports. A potential deal might involve China delaying these restrictions. China controls approximately 70% of rare earth mining and 90% of processing and refining, giving it significant leverage. Robert Manning notes that China may have "overplayed their hand" by making other nations nervous with these potential curbs.
• Fentanyl Production: Washington maintains a 20% tariff on Chinese imports, citing Beijing's alleged failure to curb chemicals used in fentanyl production, a drug linked to over 500,000 deaths in the US. China, however, states it sympathizes with the American people, has provided assistance with positive results, and remains open to continued cooperation, urging the US to take concrete actions to facilitate this.
• Soybeans: China is a significant market for American farmers, accounting for 50% of the soybean market. Securing assurances on soybean trade is a key objective for Trump.

China's Objectives

According to Robert Manning, Xi Jinping is seeking predictability and stability in the relationship, aiming to "stabilize things and kind of buying time" due to his own domestic challenges.

Underlying Unresolved Issues

Manning highlights that critical underlying issues are not on the agenda, including:

• Subsidized Overcapacity in Manufacturing: A significant problem causing unfair competition.
• Currency Issues: Disagreements over exchange rates and monetary policies.
• Strategic Competition: The ongoing battle for technological and geopolitical dominance in the Asia-Pacific region.

These unresolved tensions mean that any agreement might only represent a "temporary truce."

Taiwan and Regional Tensions

The issue of Taiwan looms over the talks. Some analysts fear Trump might offer concessions on the self-ruled island, which US law obliges Washington to defend.

US Stance and Potential Concessions

While the US Secretary of State has stated that Taipei has "nothing to worry about," there is concern that Trump, who has been ambivalent about Taiwan and has previously prevented high-level visits, might offer reassurances to China. Manning suggests that if Taiwan invests more in US chip manufacturing facilities (like TSMC), Trump might perceive Taiwan as less critical, as his primary concern is semiconductors.

Shifting US Strategic Priorities

There is a potential shift in US strategic focus away from traditional centrality in Asia and Europe towards the Western Hemisphere and homeland security. Reports suggest a new National Defense Strategy will emphasize these areas. Evidence includes increased US Navy presence in the Caribbean and potential actions regarding Venezuela and Cuba. The withdrawal of troops from Romania is also cited as an example of this shift.

Impact on Asian Nations

Commentators suggest that Trump's "saber rattling" and policies, such as his stance on renewable energy and EVs, are pushing other Asian nations and even European countries towards China. Xi Jinping is seen as benefiting from Trump's actions, which facilitate China's dominance in future energy and transport. Tariffs imposed on US allies, like India and Brazil, have also pushed the "global south" towards China, making their rhetoric appear more credible.

Expert Analysis and Outlook

Robert Manning, a distinguished fellow at the Stimson Center, provides insights into the dynamics of the US-China relationship.

Trump's Motivation

Manning believes Trump and his administration have concluded that the tariffs on China are "not sustainable" and that they had previously "underestimated China." The threat of export controls on rare earth minerals, which could impact electronics from cell phones to jet fighters, "really got Trump's attention."

Nature of the Potential Agreement

Manning suggests that the US and China have likely agreed to a number of things, focusing on Trump's priorities: rare earths, fentanyl, and soybeans. Xi Jinping, in turn, is seeking stability and time. Manning describes the potential outcome as a "temporary truce" but also acknowledges that this might be a "new stage in the evolution of US China relations," potentially leading to further summitry and an exchange of visits between the leaders.

Fragility of the Situation

Despite the optimism, Manning stresses that the situation is "fragile." He warns that "one Trump tweet on Taiwan could blow the whole thing up." However, he also believes that both sides are seeking more stability, as evidenced by market reactions to China's rare earth actions.

Conclusion on the Talks

Manning concludes that while details still need to be sorted out and the agreement could unravel, Trump's optimism regarding a short-term trade truce is "not unfounded."

Data and Statistics Mentioned

• Tariff Levels: Potentially exceeding 100%.
• Fentanyl Deaths: More than 500,000 deaths in the US.
• Rare Earth Market Share: China controls about 70% of rare earth mining and 90% of processing and refining.
• Soybean Market: China accounts for 50% of the market for American farmers.
• US Navy Presence: 14% of the US Navy is currently in the Caribbean.