US, Chinese trade officials meet prior to DC summit

MINIMAL EXPECTATIONS: Analysts think that the two sides are likely to aim for ‘status quo’-level agreements, maintaining civility, without major trade breakthroughs

US Secretary of the Treasury Scott Bessent and Chinese Vice Premier He Lifeng (何立峰) were set to meet yesterday to try to set up potential agreements on artificial intelligence (AI), tariffs and critical minerals for a summit in Washington this week between US President Donald Trump and Chinese President Xi Jinping (習近平).

The meetings at JPMorgan Chase & Co’s headquarters in Manhattan, which included US Trade Representative Jamieson Greer, were due to start at about 10:30am on Sunday morning and were expected to run all day.

Key topics would be the status of a US-China trade truce that is set to expire on Nov. 10, flows of Chinese rare-earth magnets and critical minerals that US officials say are insufficient and guardrails for AI after reports of key security breaches involving AI models.

US Secretary of the Treasury Scott Bessent and Chinese Vice Premier He Lifeng shake hands during trade talks at OECD headquarters in Paris on March 16.

Photo: REUTERS

The most likely outcome, analysts say, would be for Washington and Beijing to agree on small steps to show they are continuing to avoid escalating tensions in a delicate trade relationship that has major consequences for the global economy.

“I think there will be some show of deliverables because of the fact that it’s a presidential summit coming, but I don’t feel like we’re on the verge of some sort of breakthrough,” said Anna Ashton, a China trade analyst and founder of Ashton Intelligence. “I think status quo is probably both sides’ general best expectation.”

Many of the issues that He, Bessent and Greer would have to work through for Trump and Xi are holdovers from the two leaders’ meeting in Beijing in May, including an effort on both sides to cut tariffs on non-strategic goods and Chinese pledges to increase purchases of US agricultural goods by US$17 billion a year and to purchase more than 200 Boeing Co aircraft.

Under the truce reached in Busan, South Korea in November last year, China promised to restore the flow of critical minerals to US and global users. A senior US official said on Friday that China’s performance on that front “has not been up to par” and would be a topic for discussion ahead of the Trump-Xi summit.

The discussions on AI are significant because the US and China are the two major forces driving development of advanced AI tools and the global adoption of the technology. Rare earths play a crucial role in the manufacturing of advanced semiconductor technology powering AI.

Bessent said on Friday he expected the discussions to cover “both open and closed-weight models.” Open-weight models are AI systems with publicly accessible core elements where users can download and fine-tune them for specific tasks.

Chinese open-weight models are becoming more popular with US companies because they can be cheaper than closed-weight AI tools such as those developed by Anthropic PBC, OpenAI and other US companies.

“The United States remains the leader in AI. And we are open to discussions on avoiding shared risks and avoiding bifurcation of our two systems,” Bessent said in a statement regarding the China talks.

The US and China agreed in May to launch discussions to reduce tariffs for non-strategic goods under a so-called “Board of Trade” mechanism along with a similar forum to deal with specific investment issues.

While the Trump administration has tightened restrictions on US companies investing in some industries in China, Reuters reported on Friday that it is working on rules that would likely allow US pharmaceutical firms to invest in promising Chinese drugs and strike licensing deals for them.

The Chinese Ministry of Commerce said on Saturday that He would also lead a delegation of Chinese companies to the US that would participate in economic and trade consultations ahead of the summit.

The business delegation was announced as Trump expressed openness to Chinese automakers building US factories. US auto industry groups on Friday urged Trump to maintain an effective ban on Chinese vehicle sales in the US on national security grounds.