China asks US to protect 'hard-won' results ahead of Trump-Xi meeting

The Chinese Communist Party’s official mouthpiece called on the world’s biggest economies to “jointly safeguard hard-won achievements” from their latest trade talks, ahead of a high-stakes meeting between Donald Trump and Xi Jinping. 

Trade negotiators from China and the US announced Sunday that they’d struck a slew of agreements on issues spanning tariffs, shipping fees, fentanyl and export controls over two days in Malaysia. That marked a significant cooling of tensions, after a fresh volley of tariff threats and tit-for-tat export controls threatened to derail the bilateral relationship.

 

Striking a conciliatory tone, the People’s Daily said Monday the progress showed Beijing and Washington were capable of handling their differences. “Neither side was blindsided by these issues, instead they focused on solving the problems,” according to the commentary penned by Zhong Sheng, a Chinese homonym for “Voice of China” that’s often used to set out Beijing’s foreign policy views.  

 

 

The Hang Seng China Enterprises Index rose as much as 1.3 per cent on Monday, while the broader MSCI AC Asia Pacific Index advanced 1.5 per cent to a new intraday record. China’s 10-year government bond yields edged up, as demand for safety assets ebbed following the positive results of trade talks.

 

Xi and Trump are expected to sign off on the terms this week in South Korea when they sit down in person for the first time since the US president returned to power. That meeting could reveal details around issues such as China’s purchases of US soybeans, Washington’s plans for shipping fees on Chinese vessels and Beijing’s rare earth export controls.

 

“We expect the leaders to approve the deal, but whether it will bring lasting relief to markets is less clear — the new reality for US-China ties appears to be one of frequent ruptures and short-term fixes,” Chang Shu, David Qu and Jennifer Welch of Bloomberg Economics wrote in a note.

 

From China’s perspective, fewer external uncertainties will buy policymakers’ time to focus on supporting the domestic economy and enhancing its tech sufficiency, they added.   

 

The People’s Daily commentary called on the US to stick to the trade and economic consultation mechanism led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Export curbs announced by US officials outside that framework have derailed the system several times in recent months, prompting Beijing to jam its rare earth supply chain that’s critical to American manufacturing.

 

One potential area for a quick win is the 20 per cent tariff the US has imposed on Beijing to pressure authorities into halting the flow of precursor chemicals used to make the deadly drug. Relief on that levy — which stacks on top of Liberation Day tariffs — could be a boon for the Asian nation at a time when domestic demand is weak. 

China and the US have held five rounds of talks since Trump unveiled the highest US tariffs since the 1930s in April, which ended with Chinese exports to America facing a 55 per cent levy. 

 

“The two sides should meet each other halfway, cherish outcomes of every dialogue and continuously build mutual trust and manage differences,” according to the People’s Daily piece, which said neither nation wanted to decouple. 

 

Investors from both sides are learning to embrace the new normal of “tension, escalation and truce,” Ting Lu, chief China economist at Nomura Holdings Inc. wrote in a Monday note.

 

“It’s good for the world’s top two largest economies to dial down tensions,” he added, “but we believe the superpower rivalry will likely escalate in the future.”