US-China Trade Truce: Tensions Persist Amid Semiconductor and Rare Earth Concerns

US-China Trade Truce: Tensions Simmer

A week after a breakthrough in U.S.-China trade talks, uncertainty persists. Neither side seems entirely confident that the other is fully committed.

Semiconductor and Export Control Issues

China's Ministry of Commerce has warned it will take legal action against those involved in curbing Chinese advanced semiconductors. Meanwhile, concerns in the U.S. linger about China's rare earth export controls. According to Scott Kennedy from the Center for Strategic and International Studies, Washington expected these controls to be eased.

Ambassador Perdue Arrives in Beijing

The new U.S. Ambassador to China, David Perdue, has arrived in Beijing, signaling continued dialogue. He has already called for "strong actions" on fentanyl.

Trade Focus and Potential Agreements

Current discussions primarily focus on trade. There's potential for China to increase its purchases of U.S. agriculture and energy products. Liu Weidong anticipates further incremental progress.

Fragile Truce Undermined

Yue Su from The Economist Intelligence Unit suggests the current truce is vulnerable to export controls. Despite the focus on trade, the broader relationship influences the dynamics. Duties have been announced on imports of an engineering plastic from the U.S., Europe, Japan and Taiwan.

Economic Indicators in China

Recent data indicates slowing retail sales and industrial production growth in China. Online shopping companies have reported better sales figures, and electric car company Leapmotor reported strong gross margins. China is also gearing up for its next five-year plan, emphasizing scientific and technological self-reliance.