Trump says China ‘not easy' as trade talks to resume on Tuesday
TRADE talks between the US and China will continue into a second day, according to a US official, as the two sides look to ease tensions over shipments of technology and rare earth elements.
Representatives for both nations ended their first day of negotiations in London after more than six hours at Lancaster House, a 19th century mansion near Buckingham Palace. The talks concluded around 8 pm London time. The advisers will meet again Tuesday at 10 am in the British capital, the official said.
'We are doing well with China. China's not easy,' Trump told reporters at the White House on Monday. 'I'm only getting good reports.'
The US delegation was led by Treasury Secretary Scott Bessent, with Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer. The presence of Lutnick, the former Cantor Fitzgerald CEO, underscored the importance that export controls are playing in these discussions.
Bessent told reporters in London they had a 'good meeting' and Lutnick called the discussions 'fruitful.'
The Chinese delegation was led by Vice-Premier He Lifeng, who left without commenting to the media. With him was Commerce Minister Wang Wentao and his deputy Li Chenggang, the country's trade representative.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Wang has become a fixture in the entourage of President Xi Jinping on overseas trips since he was appointed in 2020, while Li is a veteran trade bureaucrat and was previously ambassador to the World Trade Organization.
The Ministry of Commerce can be seen as the counterpart to both the US Department of Commerce and the Office of the Trade Representative.
The US signaled a willingness to remove restrictions on some tech exports in exchange for assurances that China is easing limits on rare earth shipments, which are critical to a wide array of energy, defence and technology products, including smartphones, fighter jets and nuclear reactor rods. China accounts for almost 70 per cent of the world's production of rare earths.
Specifically, the Trump administration is prepared to remove a recent spate of measures targeting chip design software, jet engine parts, chemicals and nuclear materials, people familiar with the matter said. Many of those actions were taken in the past few weeks as tensions flared between the US and China.
Trump was noncommittal about lifting export curbs, telling reporters 'we'll see' when asked about the possibility of such a move.
'China has been ripping off the United States for many years,' the US president said, while adding that 'we want to open up China.'
The Trump administration expects that 'after the handshake' in London, 'any export controls from the US will be eased and the rare earths will be released in volume' by China, Kevin Hassett, head of the White House's National Economic Council, told CNBC earlier in the day on Monday.
Hassett's comments from Washington were the clearest signal yet that the US is willing to offer such a concession, though he added that the US would stop short of including the most sophisticated chips made by Nvidia used to power artificial intelligence.
'The very, very high-end Nvidia stuff is not what I'm talking about,' Hassett said, adding that restrictions would not be lifted on the Nvidia H2O chips that are used to train AI services. 'I'm talking about possible export controls on other semiconductors which are also very important to them.'
Chinese shares trading in Hong Kong entered a bull market, as some investors expressed hope the talks signaled a cooling of trade tensions. In the US, traders drove stocks higher, with the S&P 500 within 2 per cent of its February peak.
The first round of negotiations since delegations from the countries met a month ago is aimed at restoring confidence that both sides are living up to commitments made in Geneva.
During those discussions, Washington and Beijing agreed to lower crippling tariffs for 90 days to allow time to address a trade imbalance that the Trump administration blames on an unfair playing field.
Despite that truce, trade didn't recover in May, with Chinese exports to the US dropping by the most since the start of the pandemic and imports from the US down by almost 20 per cent in May.
A phone call last week between President Donald Trump and Xi appeared to give fresh momentum to reaching a deal.
US-China trade tensions escalated this year as Trump hiked duties on Chinese goods, prompting retaliation from Beijing. That's led to pain in both economies, including uncertainties for businesses trying to navigate sudden changes in trade policy. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
20 minutes ago
- Business Times
Weak inflation in Thailand, Indonesia and Malaysia fuels deflation fears
[SINGAPORE] After years of stable inflation, Asean economies that once battled surging prices post-pandemic may now be facing the opposite threat of deflation as global trade tensions and slowing growth weigh on demand. Thailand's annual inflation in May reflected negative growth for the second straight month, the commerce ministry reported on Friday (Jun 6). The consumer price index fell 0.57 per cent, following a 0.22 per cent fall in April – the first two negative prints since March the previous year. 'Core inflation remains below target, reinforcing the presence of slack in the economy,' said Bank of America (BOA) emerging Asia economist Pipat Luengnaruemitchai in a report following April's data. Malaysia and Indonesia announced in May that core inflation growth rates had dropped to 1.7 per cent and 1.5 per cent, respectively, missing economists' expectations of 1.8 per cent and 2.3 per cent, respectively. Indonesia had already recorded falling prices in February, the first in 25 years, sparking concerns of weakening purchasing power in the country. The Philippines recorded a similar trend. Headline inflation in April fell 1.4 per cent on the year, its lowest level since October 2019. These patterns have stoked concerns that deflationary spirals – much like China's struggles as consumer demand stalls – may arise, eroding incomes and corporate profits. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up But fears of deflation may be premature, given that the disinflation is largely due to easing supply-side pressures and not weakening demand, believes Rahul Bajoria, Asean economist at BOA. 'Food and energy prices have come down, labour markets have cooled, and currencies have stabilised. All of this is translating into lower inflation,' he told The Business Times. Made in China Nevertheless, concerns are beginning to creep into Asean countries as global trade tensions rise. Nomura's chief Asean economist Euben Paracuelles told BT: 'There are signs of structural forces at play, particularly disinflationary pressures from China's overcapacity and influx into the region of cheaper imports which can accelerate if US tariffs remain high.' Bank of Thailand governor Sethaput Suthiwartnarueput warned on Jun 2 that diverted exports from China that had failed to enter the US may be dumped into Thai markets, Nikkei reported. He highlighted industries in furniture, textiles and apparel, plastics, petrochemicals and steel that would be particularly vulnerable, with small and medium enterprises and their employees facing threats. 'A sudden flood of Chinese imports into emerging market economies can be very disruptive,' said Nomura economists Rob Subbaraman and Chen Yiru. 'Faced with growing cut-throat import competition, the likely initial response by local firms would be to cut prices to maintain market share, but at the cost of reduced profits.' 'This can be good news for consumers but over time, as local firms accumulate financial losses, they would need to downsize, cut back on jobs and capex, and ultimately many may need to close down.' China's latest manufacturing data may suggest that these upcoming fears are not entirely misplaced. Caixin China's manufacturing purchasing managers' index, a private survey which tracks the business conditions in the sector, reported a score of 48.3 on May 31, missing analyst expectations and reflecting an unexpected contraction – the country's first since September 2024. 'Stocks of finished goods accumulated for the first time in four months,' Caixin's report found. 'Survey respondents indicated that this was due to both falling sales and delays in outbound shipments of products.' As inventories build, the tariffs may force producers to cut prices in export markets besides the US – possibly Asean countries. 'As China's producers will likely push excess capacity to the rest of the world, the spillover of China's deflationary pressures to the rest of Asia will worsen,' wrote Morgan Stanley economist Chetan Ahya in the bank's mid-year outlook for the region. Yet BOA's Bajoria does not think of such pressures as a novel shock. 'This is a latent risk that's not just appearing now; it's been the case going back five or 10 years in South-east Asia,' Bajoria noted. A study by Nomura of the phenomenon in April may support this idea, finding that Chinese dumping had already been present as far back as 2019. 'Most of the countries that have experienced a slowdown in manufacturing growth also have an increasing share of manufactured imports from China,' said Nomura economists Subbaraman and Chen, who authored the study. Among the countries ranking the highest in both categories were Asean economies Indonesia, the Philippines, Thailand and Vietnam. Nonetheless, Bajoria believes that it may be premature to condemn Chinese presence in the region as unwelcome as the benefits may outweigh the costs. 'While consumption and inflation are impacted, the Chinese have also been reasonably large investors into the region, which may balance out the dumping concerns,' he added. He noted that cheaper exports can also offset some disinflation concerns by enhancing consumer purchasing power. It may also be difficult to attribute cheaper imports to deflated prices, rather than more competitive products. 'In Thailand for instance, imports from China have increased in competitive sectors like automobiles,' he explained. Easing policy Regardless of the causes of Asean's slowing prices, the region's central banks have taken advantage of lower inflation to boost growth through rate cuts, as the resultant higher prices become more manageable. Coupled with less risk of capital flight due to a weakening US dollar, disinflation has allowed central banks to be more accommodative in their monetary policies even as the US Federal Reserve maintains its rates, explained Bajoria. Singapore has already eased its policy slope, while Indonesia, the Philippines and Thailand have delivered rate cuts in recent months. Bank Negara Malaysia is expected to cut its policy rate further in the third quarter as growth eases, said ANZ economist Arindam Chakraborty, after holding rates in March. Still, central bank policy options vary by country. In Indonesia, large rate cuts could threaten the rupiah due to the risk of capital flight, Bajoria explained. As a result, the Indonesian government has turned to fiscal policy, offering toll concessions and subsidies to ease living costs. Yet, more insidious causes behind the region's low inflation, such as weakening consumer confidence and loss of manufacturing competitiveness, may translate into slower growth prospects. For Paracuellas, slower inflation may signal the presence of ailing demand, with tariff uncertainty weighing on investment and consumer spending, prompting producers to scale back on production. 'Output gaps are starting to be negative, partly on the back of global trade policy uncertainty already starting to weigh on domestic demand,' he said. 'The longer-term solution is for these countries to implement reforms to promote a more competitive manufacturing base that leverages their respective comparative advantages,' he added.
Business Times
31 minutes ago
- Business Times
Vietnam attracts global manufacturers despite US tariff increases
Despite steep US tariffs, Vietnam continues to attract strong foreign investment – especially in manufacturing and industrial real estate – driven by policy incentives, improving infrastructure and its strategic role in the move of the global supply chain away from China. Vietnam's economic ties with the United States are deep. In 2024, exports to America totalled US$136.6 billion, accounting for nearly 30 per cent of the country's gross domestic product. While the imposition of tariffs dealt a blow to Vietnam's manufacturing sector, its May manufacturing purchasing managers' index recovered slightly to 49.8 after falling to 45.6 in April, signaling early signs of stabilization. Two sectors – manufacturing and real estate – are leading Vietnam's foreign investment surge. As of April 2025, newly approved foreign investment reached US$13.82 billion, up 39.9 per cent year on year, according to Vietnam's Ministry of Finance. Of that, US$8.9 billion flowed into manufacturing, and US$2.83 billion into real estate, which jumped 61.9 per cent. Industrial and construction-related sectors grew 7.42 per cent in the first quarter of 2025, contributing more than 40 per cent to GDP. Speaking at the Vietnam Industrial Parks Development Forum on May 29, Nguyen Thi Dung, vice chair of the Vietnam Industrial Real Estate Association, emphasized that infrastructure investment in industrial parks has become an urgent priority. As prime land in central areas dwindles, demand is shifting to second-tier provinces. But challenges remain. Nguyen cited four bottlenecks: complicated approval procedures, lack of a unified infrastructure plan, land acquisition issues and poor inter-regional connectivity. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up In an interview with Caixin, Lance Li, CEO of BW Industrial, a major Vietnamese industrial real estate platform, said Vietnam's land supply system differs significantly from China's. In China, land is allocated by the government, enabling fast supply at low cost; in Vietnam, land is sold by first-tier developers, with higher prices and longer acquisition timelines. Most land in Vietnam is freehold, adding further delays to new supply. The land acquisition process is complex and time-consuming, making it difficult to rapidly increase supply, Li said. In southern centers such as Binh Duong and Dong Nai, available land is nearly exhausted. Industrial land prices in Vietnam are now often higher than in Chinese mainland, with rents rising about 6 per cent a year, Li said. Vietnam has 416 industrial parks covering a total of nearly 1.29 million hectares. To accommodate the accelerating shift of global manufacturing, the government plans to add 221 new parks, expand 76 and reconfigure 22 by 2030. BW Industrial, founded in 2018 by Warburg Pincus and Becamex IDC, now operates more than 50 projects across 12 key provinces, managing 10 million square meters of land and US$3 billion in assets. Li, who joined in 2021 from ESR China, oversees nearly 4.4 million square meters of developed or under-construction properties. Li said China-based firms moving overseas are not doing so uniformly. Each company's decision depends on internal dynamics. He warned that companies should not assume Vietnam is automatically cheaper. Many firms face high hardware costs, lower labor productivity and infrastructure constraints. 'From the Trump 1.0 era to the Covid-19 pandemic, and now to Trump 2.0, market dynamics have changed significantly, and the types and pace of corporate relocation have also evolved,' Li said. On labor, Li noted that after three months' training, Vietnamese workers could reach 80 per cent or more of Chinese workers' efficiency, while earning less than 80 per cent of Chinese wages — still an advantage. But only a few firms achieve parity, often relying on automation and advanced management. The pandemic was a turning point. Initially, only final product manufacturers moved out of China. But Covid paralyzed logistics worldwide, sparking widespread supply chain concerns. The industry shifted from 'just in time' to 'just in case,' forcing suppliers to localize. Stricter rules of origin also play a role. Many countries now demand higher local content in exported goods. 'To qualify for certificates of origin, the entire supply chain has to move,' Li said. After China lifted Covid restrictions in late 2022, another wave of companies went abroad – not due to sudden shifts, but as long-delayed decisions were finally executed. Since 2023, Chinese firms continue to expand overseas, each driven by different factors – be it rising orders, cost-cutting or domestic policy shifts. Despite some post-entry disappointments, Vietnam still holds a manufacturing edge in Southeast Asia. Confucian values instill discipline, and labor costs are lower than in Thailand but higher than in the Philippines. Government efficiency, political stability and a pragmatic, open stance add to Vietnam's appeal. The country has signed 17 free trade agreements and maintained low average tariffs, even before the Trump-era trade tensions. However, uncertainties persist. Li said clients are increasingly seeking guidance amid new tariff rumors. Trump's trade stance remains unpredictable, creating some investors wary while others push forward. He expects US tariffs on China to stay high, while those on other countries may be negotiated down. The strategy, he said, is classic 'raise high, retreat slowly' diplomacy. Looking ahead, Li believes China's outbound manufacturing push will intensify over the next three years. As long as US-China tensions persist, the shift is inevitable. Even China's cost advantages can't offset steep tariffs. With lead manufacturers relocating, tier-one and tier-two suppliers are following, forming entire supply chains abroad. The speed of this evolution depends on how quickly capacity is built up overseas. Still, Vietnam must manage rising land and labor costs. Wages rise 6 per cent to 7 per cent each year, and in advanced areas, salaries now rival China's central and western regions. Labor-intensive businesses also face potential strikes and labor disputes, Li warned. CAIXIN GLOBAL
Business Times
an hour ago
- Business Times
China, South Korea must safeguard free trade, Xi tells Lee
[BEIJING] Chinese leader Xi Jinping urged South Korea's new President Lee Jae Myung on Tuesday to work with Beijing to uphold free trade and defend 'multilateralism', state media said. In a phone call with Lee, Xi urged Beijing and Seoul to 'inject more certainty into regional and international situations', Xinhua said, as well as to 'promote strategic cooperative partnership to higher level'. 'A healthy, stable, and continuously deepening China-South Korea relationship aligns with the trend of the times,' Xi said. 'Close bilateral cooperation and multilateral coordination should be maintained to jointly uphold multilateralism and free trade, ensuring the stability and smooth functioning of global and regional industrial and supply chains,' the Chinese leader added. South Korea's new centre-left leader was elected in a landslide last week after winning a snap election triggered by his predecessor's disastrous martial law declaration. Seoul has long trod a fine line between top trading partner China and defence guarantor the United States. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Relations suffered under Lee's predecessor Yoon Suk Yeol, who cleaved close to the United States and sought to improve ties with former colonial master Japan. But both countries' export-driven economies have now found themselves in the crosshairs of US President Donald Trump's tariff blitz. And Lee hinted on the campaign trail that he would seek to improve ties with Beijing. He has also raised alarm by saying that a future conflict between China and Taiwan would not be South Korea's concern. AFP
