BEIJING (AP) – US-China trade discussions in London this week are anticipated to bring about new disputes that have strained relations and pose a risk to a delicate ceasefire in customs matters.
Last month in Geneva, both nations agreed to a 90-day pause on most tariffs of 100% or more. The threat of recession looms over both economies.
Following this agreement, the US and China have exchanged harsh words regarding advanced semiconductors, essential for “artificial intelligence,” and “rare earth” materials crucial for automakers and various sectors. Visas for Chinese students studying at American universities are also under scrutiny.
President Donald Trump eventually engaged in discussions last Thursday, as Chinese leader Xi Jinping sought to mend the relationship via phone. Trump then announced on social media that trade talks would continue on Monday in London.
Technology as the Central Issue
The latest tensions surfaced just a day after the May 12 announcement of the Geneva agreement to “suspend” 90-day tariffs.
The US Department of Commerce has provided guidance concerning the use of AI chips from Huawei, a leading high-tech Chinese company, indicating potential violations of US export controls. Despite these restrictions, many chips are still developed using American technology.
The Chinese government expressed dissatisfaction. One of the main concerns in recent times is the US’s efforts to restrict access to technology for Chinese firms, particularly those needed to manufacture cutting-edge semiconductors.
People will visit the Huawei franchise store in Beijing on April 28, 2023 (AP Photo/ng Han Guan)
“China is urging the US to promptly rectify misguided practices,” commented a spokesperson from the Commerce Department.
US Secretary of Commerce Howard Lutnick, who was absent from Geneva, will participate in a speech in London. Analysts interpret this as an indication of the US’s readiness to listen to China’s concerns regarding export control.
China Looks to Mitigate Rare Earth Concerns
China has a significant edge in the mining and processing of rare earth minerals, which are vital for not just vehicles, but also for many products including robotics and military hardware.
As of April, the Chinese government mandated that producers obtain licenses for exporting seven rare earth elements. This move has sparked concerns among automakers worldwide about potential production halts as supplies dwindle.
Workers will use machinery to dig at a rare earth mine in Gangxia County, Jiangxi Province, central China on December 30, 2010 (Chinatopix via AP)
Trump, while not specifically addressing rare earths, took to social media to criticize China.
“The concerning news is, perhaps unsurprisingly for some, that they are completely breaching the agreement we had in place,” Trump posted on May 30.
On Saturday, the Chinese government reported that it is addressing concerns raised by European companies as well. According to a statement from the Commerce Department, several approvals have been granted, indicating a “strengthening of compliance with regulatory applications.”
China’s response to the rare earth issue illustrates its leverage should they decide to bypass tariffs and other restrictions.
Revocation of Student Visas May Heighten Tensions
Typically, student visas are not included in trade negotiations; however, the US announcement regarding the potential revocation of visas for Chinese students has emerged as another contentious point in the relationship.
The Chinese Ministry of Commerce raised the issue last week while addressing allegations of violating the agreement reached in Geneva.
New US export control guidelines for AI chips have halted the sale of chip design software to China and have coincided with the visa revocations for Chinese students.
“The United States has unilaterally ignited new economic and trade tensions,” the department stated in a public message.
On May 28, Secretary of State Marco Rubio remarked that the US would “actively revoke visas for Chinese students, including those linked to the Chinese Communist Party and students studying in critical fields.”
In 2023-2024, over 270,000 Chinese students were enrolled in US educational institutions.
Source: apnews.com