China is not worried; the tech expectation is that they won’t need anything from the US in the spectrum of 2 to 3 years.
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So the latest incarnation of the much-hyped G-2 came and went. It did feel like a switch from Trump Tariff Temper Tantrum to Temporary Truce.
Naturally there has been an avalanche of spin focusing on the easing of “trade tensions”; but what really mattered in practical terms was the lack of a full “deal” after 1h40 of debate in South Korea – complete with a smiling handshake coda.
Well, anyone with an IQ over room temperature knew from the start what Trump wanted to extract from Beijing. Essentially 3 items:
- Easing of restrictions on rare earth exports, because the whole, vast US industrial-military complex with its coterie of embedded high-tech industries simply cannot be “affected” by a supply chain rupture, and there’s no way to build one in less than at least 5 years.
- China should buy enormous amounts of US agricultural products, especially soybeans: otherwise Trump’s voter base will be in revolt, then bye bye to mid-terms and even the next presidential victory. Toxic asset Steve Bannon has already announced, on the record, that Trump will run.
- China should buy enormous amounts of overpriced American oil and simultaneously decrease, drastically, its energy imports from Russia; hence Moscow will be “forced” to be back to the “negotiating table” re: Ukraine.
There was never any chance that China would even contemplate discussing item 3 – considering the role of energy in the comprehensive Russia-China strategic partnership.
So what we had were minor concessions on items 1 and 2, still quite vague.
The Chinese Ministry of Commerce, for its part, officially announced that Washington will cancel the 10% so-called “fentanyl tariffs” and suspend, for an additional year, the 24% reciprocal tariffs levied on all Chinese products, including those coming from “one country, two systems” stawarts Hong Kong and Macao.
Soybean concessions were expected. Brazil played a not very wise game by raising the price of their soybeans from $530 per ton to $680. Beijing started to have second thoughts on buying more from their BRICS brothers: China moreover is Brazil’s top trade partner. Beijing combined the devaluation of the US dollar with the bumper US crop where farmers are willing to apply a discount of 10%, and in the end got out with a good deal – with the extra bonus of appeasing the Circus Ringmaster’s domestic supporters.
Navigating the “giant ship”
Instead of trademark Circus Ringmaster boasting/bragging re: deals that may exist only in his mind, it’s much more relevant to pay attention to how this G-2 was interpreted by China.
The emphasis was on cooperation, appeasement of Trump’s volatility plus a subtle History lesson – with a long view. See for instance the terminology employed by Xi, classic metaphorical China:
“In the face of winds, waves and challenges, we should stay the right course, navigate through the complex landscape, and ensure the steady sailing forward of the giant ship of China-U.S. relations.”
Other Chinese ministerial texts sailed even further than Xi’s “giant ship”. They emphasize the concept of “mutual achievement and common prosperity”. That’s not new, coming from official China. But then there was a startling, explicit statement:
“China’s development and revitalization and President Trump’s goal of ‘making America great again’ are not mutually exclusive.”
Translation: the Beijing leadership now is self-confident enough when it comes to China’s renewed strenghths and the “objective situation” – as in the state of the geopolitical and geoeconomic chessboard. So they believe that the US and China may not necessarily have to fall into the abyss of a zero-sum game.
It’s impossible to tell whether Trump himself fully understands it. Assorted Sinophobes advising him certainly don’t.
It’s also crucial to place the G-2 in South Korea in the context of what happened right before, earlier in the week, during the several summits inbuilt in the annual ASEAN sumitt in Kuala Lumpur, as I addressed it here.
The renewed interconnected trade drive between the ASEAN + 3 (China, Japan and South Korea) and the RCEP (encompassing most of Asia-Pacific) points to East Asia counteracting the imperial tariff tantrums as a concerted unit.
And on the crucial, progressive yuanization of the planet, it was also this week that Beijing officially boosted petroyuan deals with the Arab petro-monarchies while inviting all its BRICS brothers and partners to use the Chinese Cross-Border Interbank Payment System (CIPS): in short, the digital yuan.
In parallel, Li Chenggang, Vice-Minister of Commerce and China’s International Trade Representative, made sure how the rare earth export control measures will affect China’s foreign trade in green tech products.
He said that these export controls are most of all connected with improving security: “Green development is a development philosophy (…) On the relationship between security and development (…) in short, ensuring security is essential for better development, and better development, in turn, guarantees stronger security.”
Global South nations will understand that. Not necessarily the Pentagon.
Not a word on semiconductors or Taiwan
Right after the G-2, Xi continued to enjoy the limelight at the first session of the 32nd APEC Economic Leaders’ Meeting, with a five-point proposal for promoting inclusive economic globalization, to the benefit of the “Asia-Pacific community” (not “Indo-Pacific”, which is conceptually void).
Xi talked directly to the Global South; he called for “joint efforts” to “safeguard the multilateral trading system”; build an “open regional economic environment”; keep the stability and “smooth flow of industrial and supply chains”; promote digitalization and greening of trade; and promote “universally beneficial and inclusive development.”
That’s not exactly a Trump 2.0 platform.
Well, China will host APEC 2026, and the US will host the G-20 in 2026. This G-2 in South Korea certainly may be seen as a symbolic pause, or a time out. Yet no one knows what the Circus Ringmaster may be up to next – including himself.
Two final, key points: not a word on both sides on possible US concessions related to export controls on advanced semiconductors. That means no deal. China is not worried; the tech expectation is that they won’t need anything from the US in the spectrum of 2 to 3 years.
And not a word on Taiwan. All bets are off – but it may be the case that somebody whispered on Trump’s ear (he doesn’t read) the content of Zhou Bo’s latest sharp column on the matter.
So no provocation and/or escalation. At least for now.
