In a statement released by the official Chinese state media Xinhua News Agency on Thursday evening at around 9 p.m. Beijing time, it was announced that Chinese President Xi Jinping had a phone call with US President Trump on the evening of June 5th. The announcement contained only this brief sentence.
Currently, the tense trade situation has led to instability in the US-China relations. This phone call marked the first formal contact between the two leaders since Trump took office. Their previous conversation was before the inauguration ceremony in January earlier this year.
The White House has yet to respond to requests for comments. Following the news of this phone call by Xinhua News Agency, US stock index futures surged to intraday highs.
In recent weeks, the relationship between China and the US has deteriorated, with both sides accusing each other of violating a trade truce agreement aimed at reducing high tariffs reached in Geneva. As the new conflicts threaten the fragile de-escalation in relations, market analysts are hopeful that this phone call could pave the way for trade easing.
Bloomberg reported that Trump has long believed that direct talks with Xi are the only way to resolve the differences between the two countries. Xi, however, has been reluctant to engage in direct phone calls with the US President, preferring negotiations on key issues through advisors.
In the early hours of Wednesday, Trump posted on the social media platform “Truth Social” at 2:17 AM Eastern Time mentioning Xi, stating that Xi is “very tough and difficult to deal with.” This post, written in capital letters with three exclamation marks, immediately grabbed attention. Several media outlets pointed out that Trump’s rare public emphasis on the difficulty of reaching an agreement with Xi could indicate renewed tension in US-China relations.
The recent key flashpoint has been rare earths issue. The US accused China of reneging on promises to relax export controls on rare earths, which are crucial raw materials for advanced electronic products.
US Trade Representative Greer stated in an interview with CNBC on May 30th that the US is very concerned about China’s failure to abide by the temporary trade agreement. He pointed out that Beijing has been unwilling to approve the export of key rare earth materials to the US, which is one of the reasons President Trump criticized China for violating the preliminary trade agreement.
Beijing, on the other hand, is unhappy about the US imposition of new restrictions on the sale of chip design software and plans to start revoking visas for Chinese students.
China hopes to seek the lifting of export controls on cutting-edge chips essential for artificial intelligence and military development. However, both Democrats and Republicans rare in agreement that Beijing poses a national security threat to the US in this area.
Apart from economic tensions, geopolitical frictions are also escalating. This month, US State Department officials protested remarks by US Defense Secretary Pete Hegseth at a military summit in Singapore, where he stated that Communist China poses an imminent threat to Taiwan.
History indicates that any final trade agreement between the US and China may take a long time to reach.
In 2018, during President Trump’s first term, after a round of negotiations, the two sides agreed to “shelve” their dispute, but the US soon abandoned that agreement. It wasn’t until after a year and a half of talks that the two sides signed the “Phase One” agreement in January 2020.
The US and China reached the “Phase One Trade Agreement” in January 2020, with China committing to increase purchases of US goods by $200 billion from the 2017 baseline and strengthen intellectual property protection. In response, the US lowered tariffs. However, Beijing has yet to meet the purchasing targets, and complaints about its intellectual property protection have increased rather than decreased.