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In October 2025, a two-day Kuala Lumpur negotiation rewrite the direction of the Sino-U.S. trade war.
The US Treasury Secretary's sentence "100% tariff cancellation on China" announced that the two-year game had a turnaround, and the United States was proactive.
What attracts more attention is that 500 billion foreign capital is accelerating its pouring into China, and investment in many countries has increased substantially.
But there is a bit of a question: why did the United States, which had previously claimed to be "deconnected despite it," suddenly compromise?
China and the United States reached basic consensus in Kuala Lumpur consultations
From October 25 to 26, local time, the Sino-U.S. economic and trade team held intensive consultations in Kuala Lumpur.
The first day negotiations lasted from 9 a.m. to 6 p.m., with a brief break between them, and the two sides held intense discussions around core issues such as tariffs, agricultural products procurement, and rare-earth control.
According to people familiar with the negotiations, the United States still maintained a tough stance as before at the beginning.
Not only is it trying to demand that China completely relax the restrictions on rare earth exports, but it also wants China to significantly increase the import of U.S. soybeans and energy products.
The key point is that when talking about this, they didn't mean to reduce or reduce tariffs.
In the face of this situation, Chinese representatives will not blindly condone it, but choose to stick to their bottom line.
All in all, China is willing to promote cooperation on the basis of equality and mutual benefit, but will never give in to unreasonable demands.
Under such circumstances, after five hours of tug-of-war in the key negotiations on the 26th, the two sides finally found a balance of interests and reached a basic consensus.
U.S. Treasury Secretary Bescent held a press conference as soon as the negotiations ended and announced some results.
China will "moderately increase" the scale of U.S. soybean procurement, while China's rare-earth export controls to the U.S. are expected to delay implementation for one year.
According to the news, the price of soybean futures on the U.S. Chicago commodity exchange jumped rapidly by 3%, and the market's expectations for the easing of China-U.S. trade relations also warm up instantly.
However, Besent did not mention the US concession at the press conference.
But in fact, in addition to the cancellation of the "100% tariff" plan, the two sides also reached a constructive solution to the previously controversial "20% mutual tariff extension issue" and the "US-China 301 investigation ship charges issue".
Chinese representatives also mentioned this in subsequent media interviews.
It roughly means that the United States adjusted its position and showed a pragmatic attitude in the later stage of the negotiations, so the Chinese side also made some coordination within a reasonable range.
But in fact, the key to the negotiations is that the US has recognized China's core interest claims, otherwise it is difficult to get the result now.
Although no very precise written content has yet been published, from some current information, this negotiation is very beneficial for the further development of both sides.
This has also been acknowledged by the relevant officials of the World Trade Organization, in his opinion, the easing of the relationship between the two trade powers has a positive effect on the world.
Reasons why the Trump administration chose to be soft
Seeing this situation, many people are very curious about one thing.
Trump's administration has always been a tough stance of "decoupling at the expense" before. How can it take the initiative to make concessions in negotiations now?
In fact, this "soft" is not a coincidence, much less a momentary rise, but the inevitable choice after the exacerbation of multiple contradictions such as the domestic economy and politics of the United States.
The first is that the U.S. economy can hardly bear the cost of “complete disconnection.”
Earlier, Trump threatened to impose 100% tariffs on all Chinese goods, trying to force China to compromise with extreme pressure, but this plan was strongly opposed by domestic economic circles.
Internal calculations by the U.S. Department of Commerce show that if 100% tariffs are implemented, domestic prices in the United States will rise by 15%-20% in the short term.
Among them, the increase in commodities that depend on China’s supply chain, such as electronics and everyday goods, may exceed 30 percent.
In the agricultural sector, since the escalation of the Sino-US trade war, U.S. soybean exports to China have dropped sharply by 40%.
A large number of farmers are facing downtime, and there have been protests in several agricultural states in the central and western part of the country demanding that the government resolve trade with China as soon as possible.
More importantly, China's dominant position in the field of rare earths has made the United States "lose confidence".
Rare earth is the "living heart" of the U.S. high-tech industry and military industry, from smartphone chips to missile guidance systems are inseparable from rare earth materials.
China controls more than 90% of the world's rare earth refining capacity, and the United States has almost no mature rare earth processing industry chain.
The U.S. Economic Advisory Committee has submitted an emergency report to Trump, stating that “if China completely tightened rare earth exports, the U.S. semiconductor and military industry will face the risk of stopping production in six months, losses may exceed $500 billion.”
In the face of this reality, even if Trump insists on “America first”, he has to consider the consequences of the economic collapse.
Secondly, the pressure of the domestic political cycle in the United States forced Trump to compromise.
The mid-term elections in the United States in November 2026 are approaching, and Trump's Republican Party faces severe challenges.
Looking back at the 2018 midterm elections, the Sino-US trade war caused damage to U.S. agriculture and manufacturing industries, and the Republican Party lost control of the House of Representatives. Therefore, Trump's subsequent administration was also limited.
Now, if the trade war continues to escalate and the U.S. economy declines further, the Republican Party is very likely to lose both houses of Congress.
What’s worse is the growing dissatisfaction with the Trump administration in the United States.
According to the latest poll, Trump's support rate has dropped to 41%, among which "improper handling of economic policies" is one of the main reasons for public dissatisfaction.
If he fails to make a breakthrough on trade issues and stabilize economic fundamentals, Trump may not only face doubts within the Republican Party, but may also face the risk of impeachment initiated by the Democratic Party after the mid-term elections.
For the businessman-born Trump, his political life is closely linked to his electoral interests, and he eventually chose the former between the “keeping” and the “hard”.
In addition, the attitude of the international community has also doubled the pressure on the Trump administration.
Traditional U.S. allies such as the European Union and Japan, although they agree with the U.S. on some issues, do not want the Sino-U.S. trade war to escalate.
The President of the European Commission once publicly stated that "Sino-US trade frictions have affected the stability of global supply chains, and the EU does not support any form of extreme tariff measures."
At the same time, major economies around the world have strengthened economic and trade cooperation with China. If the United States continues to isolate China, it will lose more market opportunities for itself.
In such an international environment, the Trump administration’s “extreme pressure” strategy is becoming increasingly difficult to follow.
Why can China become the biggest winner?
Such a result is undoubtedly pleasant for the Chinese side, but it is also interesting to ask: why can China be the biggest winner?
The outcome of the Kuala Lumpur negotiations and the influx of 500 billion yuan of foreign investment into the China market are no accident.
The reason China can be the biggest winner in this trade war is because China has a strong capacity to cope with risk.
This confidence comes from China's stable economic fundamentals, complete industrial system, huge market size and firm strategic determination.
As far as economic fundamentals are concerned, China has shown great resilience. Even in the context of the escalation of Sino-US trade war, China's economy has maintained steady growth.
This means that even if part of the US market is lost, China's exports can still achieve growth through diversified channels, which is an important basis for China to "take your time" in trade negotiations.
At the same time, China’s stable performance in the financial sector has also strengthened the confidence of foreign investors.
From January to September this year, the actual amount of foreign capital used in China has reached 573.75 billion yuan.
This represents global capital's recognition of China's currency stability and market security.
However, China is also clearly aware that the end of this trade war will not be "once and for all."
The Trump administration’s concessions are more of a tactical withdrawal and do not represent a radical change in the idea of “America’s Priority.”
Moreover, recent news showed that during the Kuala Lumpur negotiations, the United States also privately contacted Malaysia, Australia and other countries in an attempt to promote the establishment of a "rare earth alternative supply chain."
This shows that the United States is still seeking to weaken China’s advantage, so China is enjoying the results of the negotiations while also accelerating independent innovation in key areas.
Short-term victory is important, but only when the core technology is independently controlled, we can truly master the initiative in the future game.
China has become the biggest winner, not only in economic data and negotiation results, but also in showing the world the concept of "peaceful development, mutual benefit and win-win" through this trade war.
Different from the "zero-sum game" thinking of the United States, China has always advocated resolving differences through cooperation. This open and inclusive attitude has won the recognition of more countries.
Nowadays, more and more countries choose to strengthen economic and trade cooperation with China, and the influx of 500 billion foreign investments is exactly the global "confidence vote" on China's development prospects.
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Source of information:
[1] "Around a number of important economic and trade issues, the two sides conducted" constructive "discussions, and the Sino-US Kuala Lumpur consultation reached a basic consensus"
[2]"After China-US talks, Trump has a clear mind: there is a high probability that an agreement will be reached, and China will absorb 500 billion yuan in foreign investment"