Analysis suggests that the progress made in the chip sector during the recent meeting between leaders of the United States and China is limited, highlighting the longstanding structural confrontation between the two nations. The temporary truce in the US-China trade war is seen as a “tactical respite.”
The meeting between US President Trump and Chinese Communist Party leader Xi Jinping took place on Thursday morning local time in South Korea and lasted for 90 minutes.
While en route back to the United States, Trump, during an interview with accompanying journalists on Air Force One, confirmed that the chip issue was indeed discussed during the meeting.
“We did discuss the chip issue,” he said. “The Chinese side will discuss chip procurement with companies like Nvidia… I will also communicate with Nvidia’s CEO, Jensen Huang.”
Nvidia is one of the world’s top chip design companies, with a market value exceeding $5 trillion as of Wednesday.
“I have stated that this is essentially a matter between China and Nvidia, and we play the role of mediator or referee,” added Trump.
Trump revealed that he did not discuss Nvidia’s top-notch Blackwell chip with the Chinese side, but he believes that many American chips will be allowed for sale to China in the future.
Jensen Huang, who was visiting South Korea on Thursday, expressed his belief that the leaders of the US and China had good communication during their meeting earlier in the day.
According to statements released by both sides after the meeting, progress was made on a range of issues, including reducing and suspending tariffs, postponing rare earth export controls, increasing agricultural purchases, and halting port fees. However, the Chinese Ministry of Commerce’s statement did not mention chips.
Experts caution that these “progress” should not be mistaken for a fundamental shift in the structural confrontation between the US and China.
Tan Junyu, an economist for Coface in North Asia, said that these actions taken by both sides are tactical moves to buy time and address vulnerabilities, indicating that they will accelerate efforts to reduce reliance on each other.
Nick Marro, Chief Economist for Asia at The Economist Intelligence Unit and Global Trade Lead, pointed out that the US is well aware that relaxing chip controls is a key demand from Beijing. Even if the President shows willingness to compromise on this issue, both national security agencies and bipartisan Congress members are unlikely to support easing export control policies toward China.
“We see a huge tug-of-war within the US government between economic interests and security concerns,” he said.
Hawks in the US have long been concerned that allowing advanced Nvidia chips into the tightly controlled Chinese market may not only fail to cultivate market demand but could also boost the development of China’s military and technology industries.
Marro highlighted that China’s guidance policy has made the situation even more complex by requiring domestic tech companies to reduce reliance on the US, a directive that has become increasingly urgent.
“For years, Chinese officials have been issuing directives – whether overtly or covertly – requiring local companies to remove American products from their supply chains,” he said.
After the US briefly banned the sale of Nvidia’s H20 artificial intelligence chips for the Chinese market, the ban was lifted as part of negotiations on rare earths with China in July.
However, Chinese regulatory authorities then ordered domestic tech companies to stop purchasing H20 chips and announced an antitrust investigation against Nvidia, citing security risks.
Wang Dan, Director of the Eurasia Group in China, pointed out that China’s recent “Fifteen-Five” plan focuses on developing “original innovation.” From Beijing’s perspective, purchasing American chips is neither sustainable nor reliable. Even if short-term imports are feasible and may meet current demands.
Regarding future long-term negotiations between China and the US, she stated that even if the US temporarily relaxes chip export controls at some point, Beijing is unlikely to make significant concessions on rare earth export controls. On the contrary, China will likely demand more resources to replace imported chips from the US.
Analyst Tanner Greer stated that Xi Jinping views “America” as a strategic rival in the system confrontation.
Analysts at Wolfe Research indicated that the new trade truce between the US and China “does not address the fundamental issues in US-China relations or reverse the long-term trend towards decoupling and confrontation. However, for the market, a simple truce agreement is sufficient.”
According to statements from both sides, the US will suspend maritime logistics and shipbuilding industry 301 measures towards China, extend the suspension of equivalent tariffs, eliminate fentanyl tariffs, enhance law enforcement cooperation, increase Chinese purchases of American agricultural products, and relax export controls. The effective period for these measures is one year.
They noted that what the market truly needs is stability in US-China trade tensions, and there may still be some trade frictions in the next year.
Dennis Wilder, former China Issues Analyst at the CIA, expects that a trade agreement will be reached between the US and China during Trump’s visit to China — or even before that. He stated that if progress is minimal, both sides may reimpose punitive measures.