Text | July
Edit | July
In late October, China and the United States will hold economic and trade negotiations in Kuala Lumpur, Malaysia.
Looking at the meeting is about to be held, look at the list of U.S. negotiating teams, but do not find the name of U.S. Commerce Secretary Lutnik.
It's hard not to think of this change. Before, some media broke the news. During the internal meeting of the White House, Trump was extremely dissatisfied with Lutnik and even furious with him.
It is not difficult to see from this change that the White House's internal China policy has been completely divided into two factions. One wants to take on China, and the other wants to rely on negotiations to ease relations.
Both forces are able to fight their brains and fight themselves.
The triple inside story of Lutnik's fall from power
Lutnik's absence is no accident, but a concentrated expression of the outbreak of internal contradictions in the United States.
When the U.S. Treasury Department confirmed the list on October 23, he, who had been deeply involved in the secret talks in London in June, was directly excluded, leaving only Bessent and trade representative Greer to attend the meeting, such an adjustment of "removing the business line", hiding a triple unknown inside.
The most direct trigger is Trump’s public reproach.
At the end of September, Lutnik enforced the "50% rule", which would include companies with more than half the share of Chinese capital independently registered in the regulation, directly affecting thousands of Chinese enterprises.
This move completely disrupted Trump’s calculus – originally hoping to rely on easing relations in advance, meeting with China at the APEC summit, and also allowing China to buy American soybeans.
As a result, the Chinese side on October 9 on the offer of rare-earth counter-measures, not only the raw materials, even technology, equipment and drawings are included in the control, accurately striking the lifeline of high-end manufacturing in the United States.
Trump’s calling him “stupid” at the internal meeting, saying he “destroyed everything,” is no nonsense.
More profoundly, the victims of the power struggle.
Lutnik and Bezent have been complaining for a long time, and the two have been fighting to dominate China's economic and trade policy.
This "50% rule" triggered a surge of 167% of materials such as uranium oxide, and U.S. defense contractors rushed to appeal to Congress, and the Electronic Industry Association also intensely wrote, and Bessent had the opportunity to blow in Trump's ear, leaving the friction upgrading pot to Lutnik.
This routine of "finding scapegoats" is not new. Just like during Trump's first term, when Navarro, the trade adviser to China, was marginalized due to policy failure, Lutnik just repeated the same mistake.
There’s also a striking detail: Lutnik himself “wraps the table.”
Information sources revealed that he knew that Trump was dissatisfied with himself, afraid of attending the meeting again and instead continued to "destroy", simply proactively avoided.
From the core participants of the June London talks, to now even the list can not enter, just four months of fall gap, is the shadowing of the US policy towards China.
U.S. Supply Chain Crisis
The root cause of Lutnick's stumbling is that the "50% rule" he pushed has become a "poison" that backfired on himself.
There was no buffer period when the new regulations came into effect on September 29. On the same day, the Nasdaq high-end manufacturing sector fell 4.1%. In less than two days, at least 10 Chinese-funded companies in the United States received export license freeze notices, and the entire industry The chain was in chaos in an instant.
This rule may seem to be a "precise strike", but in fact it is not well considered.
It covers several fields such as semiconductors, space, industrial software and so on, and these key components are not left behind even magnetic magnets and laser crystals.
Three U.S. suppliers had urgently written to the Ministry of Commerce a petition for a deferral, saying "customers are in a hurry, without permission, there is no way to deliver at all", but Lutnik did not care.
Ironically, the U.S. wanted to rely on the pressure of China, and as a result, the US manufacturers either could not find an alternative source of goods, or they could only turn to Southeast Asia, and the delivery time was delayed by half a month.
China’s counter-reaction has hurt the United States even more.
In the modern industry, rare earth is an absolutely indispensable raw material, the radar system of the U.S. Army's six-generation F-47 is based on uranium to make high-temperature magnets, each of which must consume 8-12 kilograms of rare earth, while 90% of the global uranium oxide is from China.
This time, China not only managed raw materials, but also blocked production technology and equipment drawings, which was equivalent to cutting off the possibility of the United States "starting a new stove."
Although Australia wants to build a refinery, it will not have to start production until 2027, and the initial production capacity will only be 10% of the U.S. demand, but will have to use Chinese patented technology.
The chain reaction goes far beyond that.
The United States has previously unilaterally charged port charges, and China has made mutual counter-attacks, and U.S. ships have landed in Chinese ports for almost 5 million dollars.
On this side, the rise in the price of rare earth made military and industrial enterprises worried, and the cost of ports increased, the US business community complained, and even the US media could not resist to say: "Wanting to use a tariff cease-fire in exchange for rare earth to relax, is simply unrealistic".
China's Proactive Breakdown
In the face of the repeated jumps of the United States, China's response is no longer a "passive defense", but a combination of "precise strike + clear position".
The upgrading of rare-earth control on October 9 is the best example, and this time directly on the U.S. side's "seven inches" than the previous "side-observe response" model.
China's countermeasures contain three "clever ideas": First, the scope is comprehensive, extending from raw materials to technology, equipment, and drawings, blocking the US idea of "stealing technology if it cannot buy raw materials."
Second, the target is accurate, focusing on high-end manufacturing and defense industries in the United States. You must know that the U.S. Department of Defense relies on China for imports of 92% of its rare earths.
The third is to react quickly, the U.S. "50% rule" has just landed, countermeasures will follow, not give the other party a chance to breathe. like chess, before it was the U.S. step by step, China should step by step, now China can predict the other party's fall, make a good position in advance.
More importantly, China’s position is becoming increasingly clear.
Faced with the U.S. side's "pressure on the sidelines", China directly stated that "this one-sided way of waveing big bats while demanding negotiations is not the right way to deal."
This is not empty talk, but supported by actions: if you engage in the "50% rule", I will get stuck in rare earths; You charge the port fee, and I'll charge it equally.
Both safeguarded core interests, but also in accordance with the international rules of passage, so that the U.S. side wants to pick it out.
Behind this shift is China’s awake perception of “game logic”.
The U.S. has always thought of “extreme pressure” to force China to make concessions, but has forgotten that China has this irreplaceable code in its hands.
As some commentary said, "The United States does not allow others to eat, but did not think that their pot has to rely on others to supply rice."
Now China is no longer blindly giving in and has begun to actively shape the negotiation rules. This is the real reason why the United States feels anxious.
The strategic dilemma and negotiation myth of the United States
Before Bessent led the group to Kuala Lumpur, while saying "thinking to restrict software-driven products exports to China", while also saying "Allies are preparing for a response", this "talk again" gesture, exposed the deep trouble of the United States - wanting to rely on pressure to take advantage of the price, and afraid of completely stalling the opportunity.
The first myth of the US is to use "unilateral bullying" as a code.
Trump clarified three conditions for the negotiations: fentanyl, soybeans, and rare earths. He also wanted to use the November tariff truce as a condition, threatening to "not extend it until the rare earth countermeasures are cancelled."
But he forgot that China's rare earth control was a response to the "50% rule". The United States did not revoke unilateral measures first, but instead forced China to make concessions. This logic simply untenable.
The U.S. media understands that this “robbery logic” cannot let the Chinese side down.
The second myth is the serious division of internal lines.
Two factions have been fighting in the White House: the hard factions represented by Lutnik, who feel that “tariffs are all-powerful tools” and claim to overthrow each other by means of barriers;
The pragmatic faction represented by Bessant knew that fighting hard would hurt themselves and wanted to leave room for negotiation.
But now that the hardliners have fallen, the pragmatists are harder than before. Bescent attacks China's rare earth policy as "unacceptable" while avoiding the fact that the US picks things first. This contradictory statement can only make negotiations more difficult to advance.
The most fundamental thing is that the United States underestimated China's determination and capabilities.
They thought that China would be afraid of "decoupling", but they did not expect that China's countermeasures would be accurate and fierce, making the U.S. manufacturing industry unable to withstand it first;
Thought that finding allies could solve the problem, but found that their allies 'rare earth production capacity could not keep up with, and they had to rely on China technology.
As Bescent said, "Nothing is done." This statement is not so much a threat to China as it exposes the lack of confidence of the United States.
conclusion
In the end, the course of this negotiation does not depend on who will attend the meeting, but on whether the U.S. side understands the meaning of "mutual respect".
If we still hold the unilateral thinking of "giving priority to the United States", even if Lutnik comes back, even if we find more allies, we can't change the strategic passive situation.
After all, sincerity can't be exchanged by pressure, and negotiations can't be won by bullying.
Reference source:
"China and the United States will hold a new round of economic and trade consultations in Malaysia"-Xinhua Agency, October 23, 2025"Besent will lead the US delegation to China for talks on rare earth exports and trade balance" -- China Daily, October 23, 2025
China: Rare-earth export control measures are administered in accordance with law and are not targeted at any particular country — People's Daily Client, October 10, 2025
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