Latest news with #RANDChinaResearchCentre
Sydney Morning Herald
4 days ago
- Business
- Sydney Morning Herald
Xi plots next move in trade war with chips, tariffs at stake
'We're in very good shape with China and the trade deal,' Trump told reporters on Thursday after the 90-minute conversation. 'I would say we have a deal, and we're going to just make sure that everybody understands what the deal is,' he added. Loading The big immediate problem for the US was a lack of rare earth magnets essential for American electric vehicles and defence systems. After the Geneva meeting, the US side believed it had secured the flow of these materials, only to be disappointed when China kept its export licensing system in place, saying that exporters to the US still needed to apply just like everyone else. China, in turn, felt betrayed by a fresh wave of US restrictions on AI chips from Huawei Technologies, software for designing chips, plane engines and visas for upwards of 280,000 Chinese students. 'Both sides felt that the agreement in Geneva was being violated,' said Gerard DiPippo, associate director at the RAND China Research Centre. From the White House's perspective, he said, 'China committed to send the magnets.' Although Xi flexed his muscles with the rare earths restrictions, he also has reasons to come to the table. China's economy is expected to slow sharply in the second quarter and come under pressure into the second half of the year, according to Morgan Stanley economists led by Robin Xing. 'Now the China pendulum is swinging back from 'political principle' of standing firm against the US to 'pragmatism' in support of a still-fragile economy,' said Han Lin, China country director at The Asia Group. 'In other words, Beijing wants to de-escalate, and as long as there is a face-saving path for Xi to do so, now is better than never.' Xi can point to several things that indicate more is coming. The addition of Lutnick in upcoming trade talks, led in Geneva by Treasury Secretary Scott Bessent and trade representative Jamieson Greer, signals Trump may be willing to consider reversing some of the technology curbs that threaten to hobble China's long-term growth ambitions. Xi's statement after the call also made clear he expects the US to 'remove the negative measures taken against China,' which could include warnings against the use of Huawei's Ascend chips and restriction on the sale of chip design software to China. The two leaders also exchanged invitations to visit each other's country, events that will build momentum toward stabilising the relationship with agreements on thorny issues spanning trade, export controls and people-to-people exchanges. Trump said their wives would also come along, adding to the positive optics. It's significant that Trump agreed to visit China first, according to Bert Hofman, professor at the East Asian Institute at the National University Singapore and former World Bank country director for China. 'Xi probably realised that a call would be in the Chinese interest given the eagerness of Mr Trump to have one,' he said. 'This will accelerate talks and hopefully extend the truce beyond August,' he added, as the tariff reductions agreed in Geneva will expire in early September. But some analysts advised against being overly optimistic, pointing out the lack of details on key trade matters. 'There doesn't seem to be a deeper agreement that would prevent either side from taking additional negative actions, even as talks proceed,' said Kurt Tong, a former US consul general in Hong Kong and a partner at The Asia Group. Loading That fragility is compounded by Trump's transactional approach to foreign policy and ties with China in particular. In January 2020, when Trump signed a Phase One trade deal with Beijing, he said the relationship between the countries was 'the best it's ever been' before it quickly unravelled following the spread of COVID-19 around the globe. 'It would be unwise to bet that Trump has a vision for further negotiations that he won't abandon suddenly later on,' said Graham Webster, who leads the DigiChina project at Stanford University. Another area where Xi could see an early win is on the issue of fentanyl. Any deal to co-operate in blocking the flow of the drug to the US could immediately bring down American tariffs on Chinese imports by 20 percentage points. While the call helped to stem the negative trajectory of the relationship, the next two weeks will be crucial to confirm whether the truce will last, according to Wu Xinbo, a professor at Fudan University in Shanghai. He said China expects to see more progress on tariffs and US tech curbs. 'The call in itself is not a reward,' Wu said. 'What's important is what will come out of the call.'
The Age
4 days ago
- Business
- The Age
Xi plots next move in trade war with chips, tariffs at stake
'We're in very good shape with China and the trade deal,' Trump told reporters on Thursday after the 90-minute conversation. 'I would say we have a deal, and we're going to just make sure that everybody understands what the deal is,' he added. Loading The big immediate problem for the US was a lack of rare earth magnets essential for American electric vehicles and defence systems. After the Geneva meeting, the US side believed it had secured the flow of these materials, only to be disappointed when China kept its export licensing system in place, saying that exporters to the US still needed to apply just like everyone else. China, in turn, felt betrayed by a fresh wave of US restrictions on AI chips from Huawei Technologies, software for designing chips, plane engines and visas for upwards of 280,000 Chinese students. 'Both sides felt that the agreement in Geneva was being violated,' said Gerard DiPippo, associate director at the RAND China Research Centre. From the White House's perspective, he said, 'China committed to send the magnets.' Although Xi flexed his muscles with the rare earths restrictions, he also has reasons to come to the table. China's economy is expected to slow sharply in the second quarter and come under pressure into the second half of the year, according to Morgan Stanley economists led by Robin Xing. 'Now the China pendulum is swinging back from 'political principle' of standing firm against the US to 'pragmatism' in support of a still-fragile economy,' said Han Lin, China country director at The Asia Group. 'In other words, Beijing wants to de-escalate, and as long as there is a face-saving path for Xi to do so, now is better than never.' Xi can point to several things that indicate more is coming. The addition of Lutnick in upcoming trade talks, led in Geneva by Treasury Secretary Scott Bessent and trade representative Jamieson Greer, signals Trump may be willing to consider reversing some of the technology curbs that threaten to hobble China's long-term growth ambitions. Xi's statement after the call also made clear he expects the US to 'remove the negative measures taken against China,' which could include warnings against the use of Huawei's Ascend chips and restriction on the sale of chip design software to China. The two leaders also exchanged invitations to visit each other's country, events that will build momentum toward stabilising the relationship with agreements on thorny issues spanning trade, export controls and people-to-people exchanges. Trump said their wives would also come along, adding to the positive optics. It's significant that Trump agreed to visit China first, according to Bert Hofman, professor at the East Asian Institute at the National University Singapore and former World Bank country director for China. 'Xi probably realised that a call would be in the Chinese interest given the eagerness of Mr Trump to have one,' he said. 'This will accelerate talks and hopefully extend the truce beyond August,' he added, as the tariff reductions agreed in Geneva will expire in early September. But some analysts advised against being overly optimistic, pointing out the lack of details on key trade matters. 'There doesn't seem to be a deeper agreement that would prevent either side from taking additional negative actions, even as talks proceed,' said Kurt Tong, a former US consul general in Hong Kong and a partner at The Asia Group. Loading That fragility is compounded by Trump's transactional approach to foreign policy and ties with China in particular. In January 2020, when Trump signed a Phase One trade deal with Beijing, he said the relationship between the countries was 'the best it's ever been' before it quickly unravelled following the spread of COVID-19 around the globe. 'It would be unwise to bet that Trump has a vision for further negotiations that he won't abandon suddenly later on,' said Graham Webster, who leads the DigiChina project at Stanford University. Another area where Xi could see an early win is on the issue of fentanyl. Any deal to co-operate in blocking the flow of the drug to the US could immediately bring down American tariffs on Chinese imports by 20 percentage points. While the call helped to stem the negative trajectory of the relationship, the next two weeks will be crucial to confirm whether the truce will last, according to Wu Xinbo, a professor at Fudan University in Shanghai. He said China expects to see more progress on tariffs and US tech curbs. 'The call in itself is not a reward,' Wu said. 'What's important is what will come out of the call.'
Hindustan Times
13-05-2025
- Business
- Hindustan Times
Xi Jinping's defiance against Donald Trump paid off for China: Report
The US and China announced their decision to lower tariffs on each other's products for a period of 90 days, proving that Xi Jinping's firm stance against Donald Trump turned out to be beneficial for the former's country. Following two days of high-level talks in Switzerland's Geneva, a joint statement said that the combined US levies of 145 per cent on most Chinese imports will be reduced by 30 per cent while China's duties on American goods will drop to 10 per cent. During the discussions, the United States ended up meeting all of China's core demands. The elevated "reciprocal" tariff, which Trump set up for China at 34 per cent on April 2, has been suspended, leaving Beijing with the same 10 per cent levy that applies to the UK, reported Bloomberg. The deal provided some much-needed relief for American markets as well as for Trump as the dollar and stocks went soaring, while Chinese equities also saw an uptick. At the talks in Geneva, the two sides agreed to take "aggressive actions" to curb the flow of fentanyl, which could subsequently result in the elimination of the extra 20 per cent tariff. Chinese President Xi Jinping maintained his stance against the US despite Trump raising their tariffs to the highest level in any country. He refused to get on a call with Trump in contrast to other world leaders and stood his ground. Beijing reportedly instead opted to cut key interest rates and other measures to protect China's economy, while also sending out diplomats around the world to lock in fresh markets for Chinese products and slam America's "bullying". While economic difficulties did indeed strike China amid the rising US tariffs, nationalist spirit back home encouraged Xi to not give in to American coercion. Trump, on the other hand, faced immense pressure from market players and business lobbies. Trey McArver, co-founder of research firm Trivium China, said, "This is arguably the best outcome that China could have hoped for; the US backed down." "Going forward, this will make the Chinese side confident that they have leverage over the US in any negotiations," McArver was quoted as saying by Bloomberg. Meanwhile, Gerard DiPippo, associate director of the RAND China Research Centre, said the lesson out of this trade talk is that "economic power matters". "For Beijing, it's a strategic vindication, and one that makes Xi's focus on manufacturing and self-reliance harder to argue against, at least from an economic security perspective," DiPippo added. The Trump administration's retreat from sky-high tariffs wouldn't have occurred if China hadn't responded so forcefully, not only with retaliatory duties but also export controls and other steps, according to Scott Kennedy, a China expert at the Washington-based Center for Strategic and International Studies. 'This will strengthen Xi's political standing at home and his diplomatic standing internationally,' Kennedy said. 'He's the big winner from this round of the conflict.' On Monday, the US President said that he could speak to Xi as soon as the end of this week, touting a "total reset" in Washington's relations with China. However, he said that the trade deal does not include the sectoral tariffs on cars, steel, aluminium, and possibly pharmaceuticals. At a briefing, Trump said that the "relationship is very good" with China, adding that America is not looking to hurt Beijing. "China was being hurt badly. They were closing up factories. They were having a lot of unrest, and they were very happy to be able to do something with us," the US President added. With the tariff war between the US and China on a halt for 90 days, Beijing now has a three-month time to strike a wider deal with Washington to rebalance trade and safeguard its own interests as well. China's white paper on national security, as cited by the state-run Xinhua news agency, said that it is committed to the stable development of relations with the US. However, it added that imposing pressure and threats is not the right way to deal with China. With Bloomberg inputs
