US-China trade talks providing ‘optimism' of possible progress
CommSec's Tom Piotrowski claims there's 'optimism' that there'll be some progress made in the trade war between China and America amid a new round of talks between the two nations.
'One of the factors that is top of mind for Northern Hemisphere investors – or indeed globally at the moment – is the looming trade talks that will take place between the Chinese and US leadership. This is going to happen in London,' he told Sky News Australia.
'There's some optimism that there'll be some progress made, but that's only been reflected very modestly in US markets as they closed overnight.'
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9 News
42 minutes ago
- 9 News
China has a valuable card to play as it holds trade talks with the US today
Your web browser is no longer supported. To improve your experience update it here A new round of trade negotiations between the United States and China will continue into tomorrow in London, with both sides trying to preserve a fragile truce brokered last month. The fresh talks were announced last week after a long-anticipated phone call between US President Donald Trump and Chinese leader Xi Jinping, which appeared to ease tensions that erupted over the past month following a surprise agreement in Geneva. The talks began yesterday and tomorrow will mark the second day, a source told CNN. A new round of trade negotiations between the United States and China will continue into Tuesday in London, with both sides trying to preserve a fragile truce brokered last month. (CNN) Last month, the two sides agreed to drastically roll back tariffs on each other's goods for an initial 90-day period. The mood was upbeat. However, sentiment soured quickly over two major sticking points: China's control over so-called rare earth minerals and its access to semiconductor technology originating from the US. Beijing's exports of rare earths and their related magnets are expected to take centre stage at the London talks. Experts say Beijing is unlikely to give up its strategic grip over the essential minerals, which are needed in a wide range of electronics, vehicles and defence systems. "China's control over rare earth supply has become a calibrated yet assertive tool for strategic influence," said Robin Xing, Morgan Stanley's chief China economist. "Its near-monopoly of the supply chain means rare earths will remain a significant bargaining chip in trade negotiations." Since the talks in Geneva, Trump has accused Beijing of effectively blocking the export of rare earths, announcing additional chip curbs and threatening to revoke the US visas of Chinese students. Since the talks in Geneva, Trump has accused Beijing of effectively blocking the export of rare earths (CNN) The moves have provoked backlash from China, which views Washington's decisions as reneging on its trade promises. All eyes will be on whether both sides can come to a consensus in London on issues of fundamental importance. US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice Premier He Lifeng. Trump has authorised his trade negotiating team, led by Bessent, to ease up on some key export restrictions of US goods to China that the United States had put in place for national security concerns, three sources familiar with the matter told CNN. It remains unclear exactly what the negotiators will put on the table, but it appears as though the Trump administration will draw the line at some critical technology that the United States maintains is crucial for its competitiveness with China, the world's second-largest economy. In exchange for immediately easing or halting some — or perhaps a large number of – export controls, the United States wants China to release high volumes of rare earth materials. On Saturday, Beijing appeared to send conciliatory signals. A spokesperson for China's Commerce Ministry, which oversees the export controls, said it had "approved a certain number of compliant applications." it appears as though the Trump administration will draw the line at some critical technology that the United States maintains. (AP) "China is willing to further enhance communication and dialogue with relevant countries regarding export controls to facilitate compliant trade," the spokesperson said. Kevin Hassett, head of the National Economic Council at the White House, told CBS's Face the Nation on Sunday that the US side would look to restore the flow of rare earth minerals. "Those exports of critical minerals have been getting released at a rate that is higher than it was, but not as high as we believe we agreed to in Geneva," he said, adding that he is "very comfortable" with a trade deal being made after the talks. On Monday morning in an interview with CNBC, Hassett said: "This was a very significant sticking point, because China controls … something like 90 per cent of the rare earths and the magnets. And if they're slow rolling, sending those to us because of some licensing deal that they set up, then it could potentially disrupt production for some US companies that rely on those things." "And there are enough of those, like, for example, auto companies, that President Trump took it very seriously, called President Xi and said, we got to get this stuff coming out faster. And President Xi agreed," he added. Hassett said the Trump administration might be open to loosening restrictions on some microchips that China viewed as critical to its manufacturing sector, although the United States would maintain restrictions on "very, very high-end Nvidia" chips that were capable of powering artificial intelligence systems. Following the trade truce negotiated in Geneva, the Trump administration expected China to lift restrictions on those minerals. (AP) The Biden administration had cut off Chinese access to most AI chips because of national security concerns, and Trump has kept those restrictions in place. A valuable card to play In April, as tit-for-tat trade tension between the two countries escalated, China imposed a new licensing regime on seven rare earth minerals and several magnets, requiring exporters to seek approvals for each shipment and submit documentation to verify the intended end use of these materials. Following the trade truce negotiated in Geneva, the Trump administration expected China to lift restrictions on those minerals. But Beijing's apparent slow-walking of approvals triggered deep frustration within the White House, CNN reported last month. Rare earths are a group of 17 elements that are more abundant than gold and can be found in many countries, including the US. But they're difficult, costly and environmentally polluting to extract and process. China controls 90 per cent of global rare earth processing. Experts say it's possible that Beijing may seek to use its leverage over rare earths to get Washington to ease its own export controls aimed at blocking China's access to advanced US semiconductors and related technologies. The American Chamber of Commerce in China said on Friday that some Chinese suppliers of American companies had received six-month export licences. Reuters, citing two sources, also reported that suppliers of major American carmakers – including General Motors, Ford and Jeep-maker Stellantis – were granted temporary export licences for a period of up to six months. While China may step up the pace of licence approvals to cool the diplomatic temperature, global access to Chinese rare earth minerals will likely remain more restricted than it was before April, according to a Friday research note by Leah Fahy, a China economist and other experts at Capital Economics, a London-based consultancy. "Beijing had become more assertive in its use of export controls as tools to protect and cement its global position in strategic sectors, even before Trump hiked China tariffs this year," the note said. As China tackles a tariff war with the US head-on, it's clear that the disruptions are continuing to cause economic pain at home. Trade and price data released on Monday painted a gloomy picture for the country's export-reliant economy. Its overall overseas shipments rose by just 4.8 per cent in May, compared to the same month a year earlier, according to data released by China's General Administration of Customs. The Biden administration had cut off Chinese access to most AI chips because of national security concerns. (AP) It was a sharp slowdown from the 8.1 per cent recorded in April, and lower than the estimate of 5.0 per cent export growth from a Reuters poll of economists. Its exports to the US suffered a steep decline of 34.5 per cent. The sharp monthly fall widened from a 21 per cent drop in April and came despite the trade truce announced on May 12 that brought American tariffs on Chinese goods down from 145 per cent to 30 per cent. Still, Lü Daliang, a spokesperson for the customs department, talked up China's economic strength, telling the state-run media Xinhua that China's goods trade had demonstrated "resilience in the face of external challenges". Meanwhile, deflationary pressures continue to stalk the world's second-largest economy, according to data released separately on Monday by the National Bureau of Statistics (NBS). In May, China's Consumer Price Index (CPI), a benchmark for measuring inflation, dropped 0.1 per cent compared to the same month last year. Factory-gate deflation, measured by the Producer Price Index (PPI), worsened with a 3.3 per cent decrease in May from a year earlier. Last month's drop marks the sharpest year-on-year contraction in 22 months, according to NBS data. Dong Lijuan, chief statistician at the NBS, attributed the decline in producer prices, which measures the average change in prices received by producers of goods and services, to a drop in global oil and gas prices, as well as the decrease in prices for coal and other raw materials due to low cyclical demand. The high base of last year was cited as another reason for the decline, Dong said in a statement USA World China news China Donald Trump CONTACT US
Sky News AU
2 hours ago
- Sky News AU
PM needs to tackle Australia's ‘shocking' productivity levels
Nationals Senator Matt Canavan says Prime Minister Anthony Albanese needs to address Australia's 'shocking' productivity levels. 'Australians out there who haven't had their jobs secured are doing it very, very tough right now,' Mr Canavan told Sky News Australia. 'I hope in his contrition today that the prime minister particularly focuses on the one issue that is holding Australia back, and that's our shocking productivity levels.'
West Australian
2 hours ago
- West Australian
‘Battle for the 21st century' as China and US trade officials hold talks in London
US President Donald Trump's top trade officials met their Chinese counterparts in London on Monday for talks aimed at resolving an ongoing trade dispute between the world's two largest economies. US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are representing the US. China's Foreign Ministry said Saturday that Vice Premier He Lifeng, Beijing's lead trade negotiator, will be in the UK between June 8 and 13, and that a meeting of the 'China-US economic and trade consultation mechanism' would take place. National Economic Council Director Kevin Hassett on Monday said that the US was seeking confirmation China would restore the flows of critical minerals. 'The purpose of the meeting today is to make sure that they're serious, but to literally get handshakes ... and get this thing behind us,' Hassett said. He added that he expected it 'to be a short meeting with a big, strong handshake.' 'Our expectation is that ... immediately after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,' Hassett said. The talks come after Trump last week said he had held a lengthy phone call with Chinese President Xi Jinping as both look to avert a full-blown trade war. Diplomatic efforts by both sides have ramped up after weeks of heightened trade tension and uncertainty after Trump announced sweeping import tariffs on China and other trading partners in April. Beijing retaliated, and a tit-for-tat escalation in duties ensued before both sides agreed in Geneva in May to temporarily slash duties for 90 days and to facilitate talks. At the time, the US tariff on Chinese imports was cut from 145 per cent to 30 per cent, while China's levies on US imports were lowered from 125 per cent to 10 per cent. China and the US have since repeatedly accused each other of violating the Geneva agreement, with Washington saying Beijing was slow to approve the export of additional critical minerals to the US, while China criticised the US imposing new restrictions on Chinese student visas and additional export restrictions on chips. US press secretary Karoline Leavitt on Sunday said that the London talks would focus on moving forward with the Geneva agreement, noting the two sides' strategic interests in each other's markets. Analysts say the Monday talks are unlikely to make much progress in resolving disagreements and sector-specific tariffs targeting a range of strategic industries, ranging from technology and critical minerals to manufacturing and agriculture. Rebecca Harding, chief executive of the Centre for Economic Security, said on Monday that China and the US 'are locked in an existential battle at the moment'. 'There's absolutely no other way of describing all of this, and this is about how data flows. It's about information. It's about AI. It's about tech. It's about defence too,' she said. 'China's rapidly expanding its munitions production at the moment. So it's about how these two economies actually compete and survive in a digital world where nobody really knows what the power of the nation-state is. 'It's much, much more than just about trade and what's going on in that domain between the two countries. It's about how they run their economies. This is only just starting and, effectively, it's a battle for the 21st century,' she added. Optimistic that talks are taking place at all, Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, said that it could take months for trade tensions to be resolved. 'I don't really have very high expectations for these trade talks ... I doubt they will reach an agreement very soon,' he said. 'There could be some resolution on specific issues, like a rare earths, for instance, China already announced that they will give some permits to foreign firms applying for imports. Now, those kind of a temporary solution, we might see some of that come out. But I doubt we will have a complete solution coming from this dialog in the UK,' Zhang added. CNBC
