Amidst a global trade war, China arrives at the Stockholm trade talks bolstered by economic resilience and strategic resource control, aiming to extract further concessions from the US.
This week marks another crucial meeting between US and Chinese negotiators in Europe, with China now more emboldened, driven by its robust grip on strategic minerals and a resilient economy. These factors have pressured the Trump administration into easing export restrictions, notably reversing a ban on a significant Nvidia AI chip. China’s economic performance continues to defy expectations, showing impressive growth and a record trade surplus as its exports shift focus away from the US market.
Recently, China’s assertive stance was evident during a summit with the European Union, addressing minimal concerns from the bloc regarding trade imbalances and the Ukraine conflict. As talks commence in Stockholm, Vice Premier He Lifeng leads Chinese negotiators with renewed confidence in their firm approach, aiming to secure additional US concessions.
Treasury Secretary Scott Bessent, heading the US delegation, indicated a likely extension of the current trade truce, set to expire on August 12. This reprieve, established in May, temporarily halted steep tariffs threatening trade between the two largest economies. Subsequent negotiations in London salvaged the truce from collapse, but the Stockholm talks may reveal the durability of this détente and prospects for reducing tariffs and resolving tech restrictions.
Recent developments include President Trump’s trade agreements with the UK, Japan, and the European Union, amid a global tariff conflict. His tone towards China has softened, expressing eagerness to visit at Xi Jinping’s invitation soon. During a meeting with European Commission President Ursula von der Leyen in Scotland, Trump mentioned the proximity of a deal with China, albeit without specifics.
Josh Lipsky from the Atlantic Council anticipates a temporary agreement, suggesting another 90-day extension with ongoing negotiations and a possible Trump-Xi meeting in the fall. However, he warns of potential volatility, as demonstrated by recent exit bans imposed by China on US personnel, casting uncertainty over talks. Despite this, Bessent remains optimistic, highlighting constructive progress with China.
Discussions will also cover China’s acquisition of “sanctioned” oil from Russia and Iran. Commerce Secretary Howard Lutnick noted that the proposed TikTok US spinoff, pending Chinese approval, will be addressed. Chinese officials have kept the agenda vague, emphasizing ongoing consultations guided by mutual respect and cooperation principles.
Key priorities for Beijing include addressing US tariffs on Chinese imports, particularly those related to fentanyl. Last month, China announced new controls on fentanyl precursors and other synthetic opioids, hoping to negotiate tariff removals. Chinese experts emphasize building on previous agreements and enhancing economic cooperation.
China may also seek relief from technology export restrictions, including the blacklisting of numerous Chinese firms. During Trump’s first term, tech restrictions targeted major companies like Huawei, which were expanded under President Biden. Wu Xinbo from Fudan University notes that the US has recognized China’s leverage in supply chains, particularly rare earths, vital for various industries.
China’s dominance in rare earths led to licensing requirements, impacting exports despite a trade truce. This prompted countermeasures from Trump, including export controls on chip software and other technologies. Recent negotiations eased tensions, allowing rare earth flow and lifting US restrictions.
China’s leverage extends beyond rare earths to drones and electric vehicle batteries, with TikTok’s US operation divestment as another strategic card. Wu suggests China will increasingly utilize these assets, reflecting a shift in strategic thinking.
Bessent plans to address China’s continued oil purchases from sanctioned nations and its stance on the Russia-Ukraine conflict. While China might resist US tariff threats, cooperation on broader geopolitical issues remains possible. Reports from Beijing underscore the complexity and importance of these negotiations.
