Containers pile up at Taicang Port Container Terminal in Suzhou Metropolis, Jiangsu Province, China, on Might 18, 2025.
Nurphoto | Nurphoto | Getty Photos
This report is from this week’s CNBC’s The China Connection publication, which brings you insights and evaluation on what’s driving the world’s second-largest economic system. Every week, we’ll discover the largest enterprise tales in China, give a lowdown on market strikes and make it easier to arrange for the week forward. Like what you see? You’ll be able to subscribe right here.
The massive story
Only a week after a breakthrough in U.S.-China commerce tensions, neither aspect can but be assured that the opposite is holding up their finish of the cut price.
“These 90 days will not be clean,” Liu Weidong, analysis fellow at a state-affiliated suppose tank, the Chinese language Academy of Social Sciences’ Institute of American Research, advised me this week. That is in line with a CNBC translation of his Mandarin-language remarks.
He predicts elevated uncertainty and smaller steps subsequent, given the already-large breakthrough, because the U.S. and China every attempt to really feel the opposite out in direction of a center floor.
The posturing has already begun.
China’s Ministry of Commerce on Wednesday warned that it will take authorized motion towards these concerned in aiding or implementing measures to curb the utilization of superior semiconductors from China.
It follows an earlier accusation by the identical ministry on Monday that blamed the U.S. for undermining commerce talks with a Huawei chip warning final week — though the U.S. Bureau of Business and Safety had really toned down its language and dismissed a extra restrictive Biden-era plan on chips.
Many within the U.S. are additionally involved that China is not enjoyable uncommon earth export controls, one other space by which China dominates the provision chain. That is regardless of the joint assertion’s obscure description of how China would “droop or take away the non-tariff countermeasures taken towards the US since April 2, 2025.”
“I do suppose Washington was anticipating the export controls on that group of uncommon earths to be lowered, allowing exports in a comparatively unrestricted means,” stated Scott Kennedy, senior adviser and trustee chair in Chinese language Enterprise and Economics on the Heart for Strategic and Worldwide Research in Washington, D.C.
“If it seems that, actually, that’s not the end result, the U.S. will in all probability conclude that China is in violation of the settlement,” he stated. “We may see a re-escalation sooner relatively than later.”
Whereas the White Home has but to answer a CNBC request for remark, a step again reveals ambiguity on China’s aspect.
However are the uncommon earth export controls a part of China’s countermeasures to U.S. tariffs? That is up for debate. An April 4 doc from China’s commerce ministry and customs company asserting the export controls didn’t explicitly label them as such.
Whereas China did pause restrictions on 28 U.S. entities that have been slapped with export controls on crucial minerals, the ministry has made a number of public statements about strengthening export controls on crucial minerals.
“Given the excellent and aggressive nature of bilateral relations, the present truce — whereas targeted on commerce—can simply be undermined by export controls,” stated Yue Su principal economist, China, at The Economist Intelligence Unit.
“Whereas rhetorical posturing is unlikely to undermine the 90-day truce, China might nicely recalibrate its export management regime in a measured response to U.S. actions,” she stated.
The Chinese language commerce ministry on Sunday additionally introduced duties of as much as 74.9% on imports of an engineering plastic from the U.S., Europe, Japan and Taiwan.
Trump-Xi discuss?
U.S. President Donald Trump final week advised Fox Information he’s open to a name with Chinese language President Xi Jinping, or even a visit to China. However Beijing hasn’t dropped any hints.
“I would be stunned if the 2 step into the center of those points proper now with a lot unclear,” Kennedy stated.
The brand new U.S. Ambassador to China, David Perdue, arrived in Beijing on Thursday, barely greater than two weeks after being confirmed by the Senate. He was beforehand the pinnacle of Asia for U.S. packaged shopper items firm Sara Lee.
Certainly one of Perdue’s first social media posts known as for “sturdy actions” on fentanyl. He stated on X that, along with U.S. Commerce Consultant Jamieson Greer, they have been “meaningfully engaged with the Chinese language on subsequent steps to cease this harmful state of affairs.”
The U.S. has left in place 20% in tariffs imposed earlier this 12 months over China’s alleged position within the fentanyl disaster.
The joint assertion final week stated the U.S. and China would set up a mechanism for talks about financial and commerce relations, however neither aspect has specified when the subsequent one would happen.
Liu, who helped writer a report in February with The Carter Heart about bilateral cooperation, emphasised the general focus of the present talks is commerce relatively than tech. He expects that China may ultimately agree to purchase extra U.S. agriculture and vitality merchandise — given the notion that pressuring farmers can affect Trump.
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Must know
Within the markets
The efficiency of the Shanghai Composite over the previous 12 months.
Chinese language and Hong Kong shares climbed Wednesday.
Mainland China’s CSI 300 was up 0.68% whereas Hong Kong’s Hold Seng Index — which incorporates main Chinese language firms — rose 0.53% as of 12 p.m. native time.
The benchmark 10-year Chinese language authorities bond yield is at 1.669%.
Developing
Might 22: Xiaomi to launch cell phone chip, its first SUV and different merchandise
Might 27: China to report industrial income for April
