Over the past two weeks, the United States and China have made historic moves to address their simmering trade war. They have reached agreement, in-principle, on a framework for de-escalation. After two days of tense negotiations in London, negotiators from both Beijing and Washington reached an agreement. This pledge came on the heels of high-level discussions. The newly proposed framework goes further than the Geneva consensus. It is supposed to improve trade ties between the world’s two largest economies.
These conversations largely centered around the key challenge of rare earth minerals—the key to everything from a cell phone to a national defense. Both sides took to the microphone for a vigorous discussion of China’s own export controls on these critical minerals, stressing their key role in the most advanced high-tech industries. During those negotiations, a significant turn happened, as the world had witnessed these two countries accuse one another of violating their trade agreement. Just last month, Washington and Beijing reached a temporary truce on trade tariff hostilities. This deal reflects their willingness to compromise and look for areas of agreement.
China’s Vice Commerce Minister Li Chenggang talks with reporters following the conclusion of the negotiations. He underscored the need for collaboration between the two countries.
“We have reached a framework to implement the Geneva consensus.” – Howard Lutnick
The agreement reflects a mutual recognition of the challenges posed by escalating trade disputes and highlights the importance of constructive dialogue. As both sides head into the new year, they intend to present the framework to their heads of government for formal approval.
“Once the presidents approve it, we will then seek to implement it.” – Howard Lutnick
The involvement of Donald Trump and Xi Jinping is crucial, as their leadership will ultimately determine the path ahead for US-China relations. The framework provides immediate relief to the most pressing trade problems. More generally, it sets an important precedent for a strong ongoing economic collaboration going forward.