China asks US to protect ‘hard-won’ results ahead of Xi-Trump meeting

Trade negotiators from China and the United States announced on Sunday that they had reached a slew of agreements Agreements On issues including tariffs, shipping fees, fentanyl and export controls over two days in Malaysia. This was a significant easing of tensions, after a recent series of threats of tariffs and new export restrictions threatened to derail bilateral relations.

Striking a conciliatory tone, People’s Daily newspaper He said The progress made on Monday showed that Beijing and Washington are capable of dealing with their differences. “Neither side was surprised by these issues, but instead focused on resolving the problems,” according to the commentary penned by Zhongsheng, the Chinese homophone for “Voice of China” that is often used to define Beijing’s foreign policy views.

The Hang Seng China Enterprises Index rose as much as 1.3% on Monday, while the broader MSCI AC Asia Pacific index advanced 1.5% to a new record high on the day. Chinese 10-year government bond yields rose, as demand for safe-haven assets declined following positive results from trade talks.

Xi and Trump are expected to sign the terms this week in South Korea when they sit down in person for the first time since the US president returned to power. This meeting can reveal details about issues such as China’s purchases of US soybeansWashington’s plans to impose shipping duties on Chinese ships and Beijing’s export controls on rare earth elements.

“We expect leaders to approve the deal, but whether it will bring lasting relief to markets is less clear — the new reality for U.S.-China relations appears to be one of frequent interruptions and short-term fixes,” Zhang Xu, David Chu and Jennifer Welsh of Bloomberg Economics wrote in a note.

They added that from Beijing’s perspective, reducing external uncertainties would provide policymakers time to focus on supporting the domestic economy and enhancing its technological adequacy. While Chinese industrial Companies They saw their earnings rise by the most in nearly two years last month, the job market remains bleak, and the housing collapse has been ongoing for a year.

the People’s Daily newspaper The commentary called on the United States to adhere to the trade and economic consultation mechanism led by US Treasury Secretary Scott Besent and Chinese Vice Premier He Leveng. Export restrictions announced by US officials outside this framework have derailed the system several times in recent months, prompting Beijing to disrupt the rare earth supply chain that is critical to American manufacturing.

Besant said he believed China would delay its latest restrictions on rare earths “for a year while it reconsiders them” after the latest talks. It was not clear how Beijing would implement its proposed restrictions that would assert its control over any global shipment that contained even a trace of certain rare minerals from China, a move that also sparked anger in Europe.

Another potential area for a quick win is the 20% fentanyl tariff the US has imposed on Beijing to pressure authorities to stem the flow of precursor chemicals used to make the deadly drug. Relief from this tax – which is added to Emancipation Day tariffs – could be a boon for the Asian country at a time when domestic demand is weak.

China and the United States have held five rounds of talks since Trump unveiled the highest US tariffs since the 1930s in April, which ended with Chinese exports to America facing a 55% tax. the People’s Daily newspaper The article said that those talks were evidence that neither country wanted to separate.

The newspaper said: “The two sides must meet halfway, cherish the results of each dialogue, continuously build mutual trust and manage differences.”

Despite recent dovish language from both sides, global investors are learning to embrace a new normal of “tension, escalation and truce,” Ting Lu, chief China economist at Nomura Holdings, wrote in a note on Monday.

He added: “It is good for the world’s two largest economies to ease tensions, but we believe that competition between great powers is likely to escalate in the future.”