BEIJING – This week, trade negotiations between the United States and China in London are poised to address several new conflicts that have recently disrupted bilateral relations, potentially jeopardizing their delicate ceasefire on tariffs. Last month, both nations concurred in Geneva to pause the majority of their reciprocal 100%-plus tariffs for 90 days amidst a rising trade war that had triggered fears of an economic downturn.
Subsequently, tensions have arisen as the U.S. and China exchanged contentious remarks about advanced semiconductors critical for artificial intelligence, essential “rare earths” for various industries including automotive, and the issuance of visas for Chinese students in American educational institutions. President Donald Trump and Chinese leader Xi Jinping held an extensive phone conversation last Thursday to try to mend relations. Following this discussion, Trump announced via social media that trade talks are set for Monday in London.
The area of technology remains a contentious issue. The recent tensions surfaced a day after the May 12 announcement of the temporary tariff pause from the Geneva agreement. The U.S. Commerce Department released guidance indicating that using Ascend AI chips from Huawei, a prominent Chinese technology firm, might contravene U.S. export controls. The guidance highlighted that these chips were potentially developed with American technology despite existing export restrictions to China.
China reacted strongly to this, as it has been particularly displeased with U.S. actions to restrict Chinese companies’ access to technology, especially regarding the materials and methods essential for manufacturing advanced semiconductors. A spokesperson for China’s Commerce Ministry urged the U.S. to immediately amend what it described as erroneous practices.
Although not present in Geneva, U.S. Commerce Secretary Howard Lutnick will be attending the discussions in London, suggesting a U.S. openness to consider China’s viewpoints on export controls.
In the realm of rare earths, China holds a distinct advantage due to its dominance in mining and processing these substances, essential for products ranging from automobiles to advanced military equipment. In April, China began mandating that producers acquire licenses to export seven critical rare earth elements, triggering shortages that caused anxiety among global automakers as their inventories depleted.
Although President Trump did not explicitly reference rare earths, he took to social media to criticize China, accusing it of failing to honor its commitments. In response, China indicated its efforts to resolve these issues, stating through its Commerce Ministry that it had approved some applications for export licenses and plans to continue processing compliant applications.
This development underscores China’s potential leverage against trade sanctions or other economic actions. Adding to the strain, a U.S. plan to revoke student visas has also surfaced as a divisive topic in the trade discussions.
China’s Commerce Ministry referenced this issue when queried about supposed breaches of the Geneva accord. In response, the Ministry pointed out that the U.S. had disrupted the agreement by introducing new export control rules on AI chips, stopping sales of chip design software to China, and threatening to withdraw Chinese student visas.
In a statement, U.S. Secretary of State Marco Rubio announced aggressive measures to revoke visas for Chinese students, particularly those connected to the Chinese Communist Party or engaged in sensitive fields.
During the 2023-24 academic year, over 270,000 Chinese students pursued studies in the United States, illustrating the potential impact of this move on educational exchanges and the broader trade relationship.