The United States and China have made significant progress in their trade talks, agreeing on a framework that aims to deescalate tensions between the two nations. The agreement, reached after two days of talks in London, will be presented to US President Donald Trump and Chinese President Xi Jinping for approval.
US Commerce Secretary Howard Lutnick expressed optimism about the progress made, stating that the sides would work to implement the “Geneva consensus” and had “pounded through” all the issues dividing the world’s two largest economies. “Once the presidents approve it, we will then seek to implement it,” Lutnick told reporters outside Lancaster House.
The talks, described as “professional, rational, in-depth and candid” by Chinese Vice Commerce Minister Li Chenggang, focused on finding a path forward to increase trust between China and the United States. Li added that the two sides would report to their respective leaders on the talks and the framework reached in principle. “We hope that the progress we made in this London meeting is conducive to increasing trust between China and the United States.”
The agreement comes as the global economy faces uncertainty due to trade tensions. The World Bank recently lowered its forecast for global growth from 2.7 percent to 2.3 percent, citing ongoing uncertainty around trade. However, Asian stock markets rose on hopes of a de-escalation in trade tensions, with Japan’s Nikkei 225 up almost 0.5 percent, and the Hang Seng in Hong Kong and CSI 300 in mainland China up about 1 percent and 0.8 percent, respectively.
Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, noted that meeting a 90-day deadline for complex discussions was always going to be challenging. “After two rounds of apparently intense discussions, both sides seem to have reaffirmed their interest in avoiding new escalation and have started to flesh out the path forward. Despite the optimistic language from some out of the White House, these talks are not going to be easy.”
The US measures imposed in response to a slowdown in Chinese exports of rare earths would likely be eased once supplies of the critical minerals ticked up, Lutnick indicated. This development has the potential to bring relief to the global economy, which has been impacted by the ongoing trade tensions between the US and China.