The negotiations between the United States and China regarding the control of rare earth exports and the transfer of artificial intelligence chip technology continue to be deadlocked. Despite recent framework progress at the London talks, experts believe that the core differences between the two sides remain unresolved, reflecting fundamental disparities in economic models and strategic goals.
The highly anticipated US-China talks took place in London on June 9-10. Wang Guochen, a researcher at the Taiwan Institute of Economic Research, stated on June 18 that the negotiations did not yield any breakthroughs, but rather amounted to stalling tactics.
According to reports from The Wall Street Journal on June 16, the Trump administration is significantly strengthening technological restrictions on China’s artificial intelligence industry. The US Department of Commerce’s Bureau of Industry and Security is preparing to restrict the sale of American technology to subsidiaries and affiliates of Chinese companies on the trade blacklist, as well as conducting a comprehensive review of “products with strategic significance.”
Jeffrey Kessler, the director of the Bureau of Industry and Security, emphasized during a hearing before the House Committee on Foreign Affairs last week that the US aims to proactively develop strategies towards China to ensure the effectiveness of control measures.
This stance aligns with the firm position expressed by US Treasury Secretary Besent on June 11 – the US will not relax export controls on high-tech AI chips for the sake of Chinese rare earths.
The joint statement from the US-China talks in Geneva on May 12 initially promised to “suspend or cancel non-tariff retaliatory measures against the United States since April 2, 2025,” with the core commitment being the lifting of export controls on certain rare earth-related items from April 4, 2025.
Wang He, a commentator from Da Ji Yuan, pointed out that while China verbally agrees to concessions, they are deceiving and stalling by continued withholding of rare earths destined for the United States. This has provoked the US, leading the Trump administration to swiftly implement countermeasures, including banning the export of critical aircraft parts, semiconductors, and ethylene, essential for plastic manufacturing to China, and threatening to revoke visas for Chinese students.
The June 9-10 US-China talks in London only came about following a phone call between Trump and Xi on June 5.
After tough negotiations, the London talks achieved a limited framework: China agreed to immediately resume the supply of magnets and rare earths, while the US pledged to relax export controls on semiconductors and other goods, and to welcome Chinese students back. The tariff structure was finalized with the US imposing a 55% tariff on China (including a 20% fentanyl tariff, 10% retaliatory tariff, and existing 25% tariff), while China imposed a 10% tariff on the US.
However, experts are generally pessimistic about this outcome. Li Zhenyu, Chief Economist at Taiwan’s Cathay Financial Holdings, expressed that the US-China London talks were essentially a spectacle with minimal substantive progress. He opined that it is more about “relationship management” than a thawing of relations to prevent further deterioration.
Li further analyzed the core issues, revealing that China insists on restricting rare earths to civilian use only, prohibiting military applications, and requiring a review every six months. “China still wants control over everything… while the US is open to negotiation on everything except AI chips.”
He believes that the relationship between the two sides is essentially about “crisis management,” aimed at risk management and leverage creation, rather than a full thawing of relations.
Wang Guochen, when interviewed by Da Ji Yuan, echoed this sentiment, stating that the US-China talks were essentially about stalling. He asserted, “China hopes to stall for technological development, while the US is stalling in hopes of forming an anti-China alliance.”
Facing the far-reaching implications of the US-China geopolitical game on the global economic and trade landscape, Li Zhenyu proposed a trend of “decentralization.” He likened this shift to the core concept of Bitcoin, emphasizing that the future of international trade would center around this theme. “In the past under the framework of the WTO, all manufacturing was located in the cheapest places globally and exported to the largest markets, reflecting a centralized concept. But that won’t be the case anymore.”
He further explained that the logic of global trade has shifted from rules and openness to power and pressure. “The effectiveness of the WTO has waned, and now everyone negotiates bilaterally – the one with the chips designs the structure.”
Li added that the vulnerability of supply chains during COVID-19, combined with China’s strategic maneuvers, has left countries wary.
He analyzed that China operates under a planned economy to maximize regime stability and will continue to prioritize the manufacturing sector. He stated, “The Communist Party of China does not necessarily favor a shift towards domestic consumption, as it would challenge stability.”
On the other hand, the US will mobilize all economic and trade tools to build a encircling network around China.
Experts believe that the impasse in US-China trade negotiations stems from the fundamental differences in economic models and strategic goals between the two sides. Against this backdrop, the decentralization of global supply chains and the restructuring of the economic and trade landscape are expected to be long-term trends.