Deal ‘is done’, says Trump, as China and US trade truce gets back on track after London talks

BEIJING – China and the US agreed to revive a fragile trade truce after two days of talks in London, further defusing tensions between the two geopolitical rivals.

US President Donald Trump said on June 11 that the deal with China “is done” and that the relationship was “excellent”.

Hours earlier, Chinese Vice-Premier He Lifeng, who led the negotiating delegation in London, called on the US to “stay true to your words” and “demonstrate good faith in keeping promises”.

The agreement, which concluded close to midnight on June 10 in London, followed

a roller coaster of rising and easing tensions over non-tariff measures,

after both sides agreed in May in Geneva to a 90-day truce that sharply lowered tariffs on each other’s goods.

The main sticking points since May were Beijing’s restrictions on rare earth exports to the US, and Washington’s curbs on the export of chip design technology to China.

In a Truth Social post, Mr Trump said full magnets, along with any necessary rare earth minerals, will be supplied upfront by China.

In return, the US will provide to China “what was agreed to”, including allowing Chinese students to attend colleges and universities in the US, which he noted “has always been good with me”.

Separately, US Commerce Secretary Howard Lutnick told reporters that the “framework” reached in London puts “meat on the bones” of the Geneva agreement, adding that it will still need approval from both leaders.

He said

Chinese restrictions on rare earth minerals

and magnets and some of the recent US export restrictions would be removed “in a balanced way”, but did not provide details.

Chinese Vice-Commerce Minister Li Chenggang told reporters after the talks that both countries had agreed on a framework to implement the consensus that Chinese President Xi Jinping and Mr Trump had reached after a June 5 phone call, as well as May’s trade truce.

He described the talks as in-depth, professional, rational and frank.

“The progress achieved at the London talks is beneficial to enhancing trust between the two countries, advancing the healthy and stable development of China-US economic ties, as well as provide positive energy to the global economic development,” Mr Li said.

Analysts saw the latest talks as positive.

Professor Wu Xinbo, director of the Centre for American Studies at Shanghai’s Fudan University, said he expects the US to roll back the non-tariff measures threatened or imposed on China after the Geneva talks, such as revoking visas of Chinese students studying in the US.

“As for the Chinese side, it may accelerate the process of rare earth exports to help resolve the urgent needs of the Americans,” he said.

The May agreement was derailed on June 1 when the US accused China of “slow-rolling” licences for exports of rare earths, which are critical in the production of cars, chips and other products.

China dominates the world’s rare earth supply chain, accounting for nearly 70 per cent of the global mining output and processing about 90 per cent of the total supply – a trump card Beijing has cultivated for decades.

However, economist Bert Hofman noted that China’s delay in rare earth export licences was partly due to “bureaucratic inertia”.

“The process was cumbersome and brought issues for industries around the world, not just for the US. So it was not specifically targeted at US companies,” he said.

Washington, meanwhile, activated its own levers on China.

On May 29, it announced the revocation of visas for Chinese students and issued export control guidelines for artificial intelligence (AI) chips, as well as effectively halted sales of chip design software to China. Chinese tech companies that design chips rely on such foreign software, known as electronic design automation.

China’s Ministry of Commerce on June 2 criticised these measures as discriminatory and accused the US of violating the consensus of the Geneva talks.

Just as all the signs pointed to the breakdown of the truce, the June 5 call between Mr Xi and Mr Trump was widely seen as having reset fraught relations.

This was followed on June 7 by China’s Ministry of Commerce announcement that it had approved a number of applications for rare earth exports, and will continue to strengthen the approval process for such applications.

Even as the London talks were ongoing, Beijing strategically underscored its resilience. In a front-page interview in the official People’s Daily on June 10, Huawei founder Ren Zhengfei discussed China’s technology and research capabilities, particularly in chips.

The Chinese telecommunications equipment giant has emerged as a national champion in areas such as AI chips called Ascend processors, which Washington has recently warned other countries against using.

Asked how he feels about Huawei being under a blockade, Mr Ren said: “Don’t think about the difficulties – just do it, one step at a time.”