China continues to wield significant leverage over the United States due to its dominance in the rare earth minerals market. This comes amid ongoing trade negotiations between the two nations. The backdrop includes a meeting between U.S. President Donald Trump and Chinese President Xi Jinping, scheduled for Thursday during the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea.
Recent Trade Developments
Recently, both countries announced a potential trade agreement following extensive discussions. These discussions included meetings in Geneva and Madrid earlier this year. U.S. Treasury Secretary Scott Bessent expressed optimism, stating that an agreement would help avert further tariffs.
- Trade talks began in May and continued through September.
- A substantial framework for the meeting was announced at the Association of Southeast Asian Nations summit in Kuala Lumpur.
- President Trump echoed optimism, suggesting a possible deal with China.
Despite this prospect, experts caution that the relationship remains fragile. Mary Lovely of the Peterson Institute warned that while a ceasefire exists, it does not guarantee long-term disarmament in trade tensions.
Key Terms of the Agreement
Although details are still emerging, several key points have been highlighted:
- China may delay export controls on rare earth minerals for one year.
- Chinese imports of U.S. soybeans could resume.
- The deal suggests a resolution concerning TikTok’s U.S. operations transfer will be addressed.
The Importance of Rare Earth Minerals
Rare earth minerals are vital for modern technology, including smartphones, electric vehicles, and advanced military equipment. Currently, China controls approximately 70% of the mining and 90% of the processing of these essential resources.
The U.S. dependency on these materials places it in a vulnerable position. Recent actions by China, including stricter controls on exports, have underscored this dependence and created uncertainty leading up to the Trump-Xi meeting.
Domestic Considerations
Domestic political climates in both countries also impact negotiations. Xi Jinping recently showcased China’s commitment to technological self-reliance, while Trump navigates challenges within the U.S. government, including the possibility of a prolonged shutdown.
As these two economic giants prepare for talks, the stakes are high. The global economy’s stability may hinge on their ability to find common ground. Many nations are keen to avoid a significant conflict between China and the U.S., recognizing that when major powers clash, smaller nations often bear the consequences.
