The economic and trade negotiations between China and the United States in Kuala Lumpur in the past two days have just ended, and they have become a stir. The original plan was to lengthen the talks, but it ended in two days from October 25th to 26th, ending one day earlier. U.S. Treasury Secretary Scott Besant and Trade Representative Jamison Greer led the team, and China was led by Vice Prime Minister He Lifeng and Vice Minister of Commerce Li Chenggang, who held consultations at Merdeka 118 Building in Kuala Lumpur, Malaysia. The official website of the Ministry of Commerce issued an announcement, and Li Chenggang also told reporters on the spot that the two sides had reached preliminary consensus on several key economic and trade issues, and the next step was to go through domestic procedures. When this happened, markets around the world breathed a sigh of relief. Dow futures rose slowly and the RMB also stabilized its position.
Let's start by telling you why the conversation is so fast. In the past month, Sino-US economic and trade relations have experienced minor fluctuations. China has tightened export controls on rare earth since April, and increased the restrictions on October 9, restricting the export of rare earth magnets, electric vehicle battery equipment, and semiconductor saw blades. 92% of the world's rare earth refining is in the hands of China, and the United States relies on these things for chips, electric vehicles, and new energy. When Trump saw that something was wrong, he announced in early October that he would impose a 100% tariff on China goods starting from November 1, and also involved fentanyl related taxes, port fees, and ship surcharges, making it clear that he would be tough. On the other hand, China is not in a hurry, continues to control rare earths, and also responds to countermeasures taken by the US maritime logistics and shipbuilding industries. As the trade truce expires on November 10, both sides have to find a way out.
When the talks began, the U.S. broke the bottom line. Bessent said directly in ABC’s “This Week” show that Trump’s 100% tariff threat was the biggest crackdown, used to force China’s rare-earth neck. Grill also blasted reporters, talking about rare-earth, extended tariff suspension, Fentanyl tariffs, fighting drug cooperation, expanding trade, export control these hard bones. Two days down, the frame came out: China agreed to postpone rare-earth export restrictions for at least a year, the U.S. suspended the 100% tariff program, suspended Fentanyl’s related additional taxes and port charges shipping taxes. China also promised to buy more U.S. soybeans before the first quarter of 2026, at least 15 million tons. After
Don't look at the U.S. side to say happy, this time is really shake the bottom of the house. Before the four rounds of negotiations, you add me down, the stricter the talk, this time the hawk trade minister Howard Lutnik did not appear, in exchange for Bessent and Grill, the gesture was soft a lot. 100% tariff this card, had been shaken, the result was first to throw out the bargaining price, and finally to recover. This is rare, the U.S. is not apart from China, the global supply chain, electric car batteries, semiconductors, military industry all lay down. Bessent himself is still a farmer, knowing that soybean exports a card, the middle western peasants cry. the negotiations ended, he left Kuala Lumpur to fly back to Washington,
The Chinese side on this side, stable like the old dog. Li Zheng Steel to the media stressed that the last month shock is not what China wants to see, but the Chinese side has been honestly fulfilling the agreement andining cooperation.In the process of talks, the U.S. position is tough, the Chinese interests are firm, always equal dialogue. The core is not easy: rare-earth control remains as a strategic tool, high-tech export ban does not shake, soybeans buy is to buy, but not equal to a full set of concessions.The Ministry of Commerce announcement illuminated, discussed U.S.-China 301 measures, tariff suspension extended these, the preliminary consensus is exchange – don’t increase taxes, I buffer control.
Once this framework was released, the market smelled it. Bloomberg consensus shows that the probability of extending the trade truce has soared to 75%. Emerging market funds had net inflows of US$4.2 billion into China last week, rising for three consecutive weeks. MP Materials rare earth stocks rose 12% in pre-market trading, with ADM agricultural stocks leading the gains in the Midwest. China's A-share ETF ASHR rose 2.1%, and the offshore RMB recovered 7.05. The Australian dollar and New Zealand dollar also followed suit in early trading by 0.4% to 0.5%. On the ASEAN side, Malaysia was happy to see its success and took the opportunity to sign an upgraded free trade agreement with China. Trump waved a document in the White House Rose Garden on the 27th and said that TikTok is close to a comprehensive agreement and is about to have an idea. He started his trip to Asia, his first stop in Kuala Lumpur, paving the way for this.