The leaders of the world’s two biggest economies will meet Thursday, just days after the Trump administration declared it had brokered a tentative tariff truce, in an encounter that could soothe fears – at least temporarily – about the consequential U.S.-China relationship veering painfully off course.
For Chinese leader Xi Jinping, the meeting will be vindication that Beijing’s use of economic coercion to gain an edge over Washington is effective – especially because the vague deal outlined by U.S. trade envoys over the weekend represents little more than a return to the status quo before Trump came back to the Oval Office in January.
“The Chinese ‘escalate to de-escalate’ model worked to get them what they wanted,” said Yun Sun, director of the China program at the Stimson Center in Washington, who was in Beijing this month for talks on security issues.
“They want the U.S. to learn humility, and they want the U.S. to understand who holds the upper hand here. There’s quite a bit of arrogance involved,” she added.
Xi and President Donald Trump are set to meet on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea on Thursday – their first in-person meeting in Trump’s second term – following months of trade brinkmanship. It reached a zenith this month when Beijing announced sweeping export restrictions on crucial raw materials needed to make smartphones, fighter jets and more.
Ahead of the meeting, negotiators on Sunday announced a preliminary agreement that the Trump administration said would see Beijing defer restrictions on rare-earth minerals – measures poised to harm the U.S. economy – and avert the additional 100 percent tariffs that Trump had threatened to impose on imports from China.
The rare-earth controls, as announced, would extend Beijing’s reach beyond its borders by requiring approval for foreign entities shipping goods containing trace amounts of Chinese raw materials, mirroring U.S. semiconductor policies that include similar extraterritorial measures.
These sweeping restrictions would affect almost every country, and took governments and analysts alike by surprise because of their potentially enormous impact on the global economy.
Xi’s willingness to unveil such momentous measures underscore his confidence on the world stage and increasing willingness to play hardball with Trump, experts in Beijing and Washington say.
This assertive posturing has only been bolstered by events that have cemented Xi’s status as China’s most powerful leader in decades, said Jonathan Czin, a former CIA expert on China who is now at the Brookings Institution.
“He is feeling large and in charge in this moment,” Czin said.
Xi just presided over a major Communist Party meeting to set China’s policy direction for the next five years, hosted aligned world leaders for a display of military might at a parade in September, and tightened his grip on the military with yet another purge of senior defense officers.
Trump, by contrast, will arrive in South Korea with Washington hobbled by a month-long government shutdown, Czin said – a split-screen moment that is probably feeding Xi’s sense of leverage and China’s narrative that the United States’ dominance is faltering.
“There’s going to be a really jarring juxtaposition just in terms of visuals,” Czin said. “It’s just going to feed the PRC propaganda that they are the stable stewards of the international system,” he said, using the abbreviation for the People’s Republic of China.
Still, both Beijing and Washington seem to want to stabilize relations, as evidenced by the negotiations in Malaysia this past weekend.
After those talks, Treasury Secretary Scott Bessent said Chinese officials had agreed to defer rare-earth restrictions by a year and resume purchases of U.S. soybeans. China accounted for half – or $12.6 billion – of American soybean exports last year but has stopped buying the U.S. beans in retaliation for tariffs.
U.S. Agriculture Secretary Brooke Rollins wrote on social media that China’s “commitment to make substantial purchases of U.S. soybeans brings the market BACK into balance and secures years of prosperity for American producers.”
Bessent also said the two leaders may “consummate” a deal to sell the U.S. operations of TikTok, the Chinese-owned social media app that is under threat of a U.S. ban.
Chinese officials were far less direct about the contents of any agreement, but also projected optimism.
China is “willing to work with the U.S. side to promote positive outcomes,” foreign ministry spokesperson Guo Jiakun said at a news conference Wednesday, specifically noting that Beijing is open to further cooperation on the issue of fentanyl.
Beijing kept under wraps any concessions the U.S. side may have offered and did not confirm that it had deferred the rare-earth controls.
“We are seeing a fairly positive outcome, and both sides believe the negotiations are constructive and beneficial for further progress” said Zhou Mi, a trade expert at the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated with China’s Ministry of Commerce.
However, he urged caution: Many details are not yet public, including whether a possible deferral would apply to restrictions that have already been implemented.
It’s been a rocky ride for the world’s two largest economies since Trump returned to the White House in January.
Tit-for-tat levies ballooned into the triple digits in the spring before officials brokered a temporary reprieve in May. Since then, Washington has lashed out with high-tech export controls and port fees on Chinese ships, while Beijing has investigated U.S. companies for antitrust violations and tightened its hold over rare earths.
Henry Huiyao Wang, founder of the Center for China and Globalization, a Beijing think tank, said that the latest rare-earth controls are merely a response to U.S. actions against China and show that Beijing is adopting Washington’s playbook.
“It’s exactly the same logic that U.S. has been using for eight years,” Wang said. “For the first time the U.S. was on the receiving end of that, and then they suddenly realized how ridiculous that can be.”
The question of what Beijing may have demanded in exchange for easing rare‑earth restrictions looms large.
Beijing is probably looking for a tariff reduction, as well as a rollback of port fees and – most crucially – U.S. technology export controls that have targeted China’s artificial intelligence and defense industries, experts say. In addition to loosening rare-earth controls, China could offer more soybean purchases and cooperation on stemming the global flow of fentanyl, which Trump has accused Beijing of facilitating.
Trump seems to be looking for a quick deal, eyeing a political win in the form of agricultural agreements ahead of the midterm elections, which could result in hefty concessions to Beijing, according to former senior U.S. officials, who spoke on the condition of anonymity to discuss sensitive matters.
One potential concession could be a downgrading of U.S. support for Taiwan, the self-governing island that China views as a renegade province and threatens to take by force, analysts and former officials say.
“There is a real chance that the president is contemplating adjusting U.S. policy toward Taiwan,” one of the former U.S. officials said. “He appears to accept the idea that … smaller places around big countries have to kind of accept their realities.”
Many experts agree that economic issues are likely to be far higher on the agenda Thursday, and Rubio dismissed concerns over the weekend that Trump would walk away from Taipei for a trade deal.
Xi’s more assertive and politically confident approach has been noticed in Washington.
“I am struck by the level of Chinese confidence,” one of the former senior U.S. officials said. It is “really off the charts, and I think they feel like they’ve cracked the code. With President Trump, you have to be hard-line.”
Trump, meanwhile, has recently softened his stance on several China policy issues, including allowing certain AI chips to be sold to China, dissuading Taiwan’s president from a U.S. visit this summer and nixing $400 million in military aid to Taiwan. China opposes U.S. military support for Taiwan, which it claims as its own territory.
“The story of the six months leading up to this is that they have extracted some meaningful concessions from the U.S.,” Czin said.
But the picture isn’t entirely positive for Xi.
Though China has been able to manage the blow of U.S. tariffs better than many expected – in part by directing exports to regions such as Southeast Asia and Africa – a trade war threatens to exacerbate China’s persistent economic slump, which has contributed to high youth unemployment and sagging consumer confidence.
The rare-earths gambit could also backfire diplomatically, especially because the export controls apply to countries across the world. European Commission President Ursula von der Leyen in a speech last week, for instance, criticized the controls and vowed to reduce China’s chokehold on the raw materials.
Even with the recent burst of high-level diplomacy, the expectations are low for a fundamental improvement in the U.S.-China relationship. Underlying disagreements on defense, human rights and technology issues threaten to disrupt any détente.
“The current China-U.S. relationship is more like risk management,” said Ren Yi, a politically connected writer in Beijing who uses the moniker “Chairman Rabbit.” “A more pragmatic goal is to prevent the situation from worsening. … In this context, no bad news is good news.”
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Lyric Li in Seoul contributed to this report.
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