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Tag: Beijing

  • Analysis-China can’t make consumers buy goods, so it leans on services to drive economy

    By Kevin Yao

    BEIJING, Jan 21 (Reuters) – China is planning to introduce new measures to promote the consumption of services, betting that elderly care, healthcare and leisure can offset tepid demand for goods, though analysts say the plan’s success hinges on elevating household incomes and social welfare.

    Beijing views labor-intensive services as a key to reorienting its economy toward consumption as it tries to wean itself off a traditional dependence ​on big-ticket investment and exports.

    Authorities are likely to unveil incentives, ease market barriers and invest in high-growth sectors to tackle supply gaps, but deeper reforms to elevate incomes and strengthen the safety net are critical, policy advisers ‌and analysts say.

    In contrast to China’s manufacturing sector – where supply often exceeds demand – the services sector faces chronic shortages because of underdevelopment and years of policy bias towards factories.

    “Policymakers are placing greater emphasis on services consumption given its big potential,” said a policy adviser who requested anonymity because they were not ‌authorised to speak publicly. “But expanding the sector will be a gradual process, aligned with the pace of economic transformation.”

    Chinese leaders have vowed to “significantly” lift household consumption’s share of the economy over the next five years. Most policy advisers believe China should lift its share to 45% by 2030, up from roughly 40% at present.

    Leaders have vowed to “invest in people” by boosting spending on education, healthcare and social security – a signal of stronger support for families and a push to lift household spending power.

    Chinese households are channelling more spending into services – from elderly care to travel and entertainment – as demand for big-ticket goods plateaus. Most families appear to have sufficient supplies of goods and per-capita GDP is nearing $14,000. The shift underscores China’s move toward a services-led consumption model.

    “Rebalancing itself is more a matter ⁠of the relative importance of consumption and investment in the economy, rather than whether ‌consumption takes the form of goods or services,” said Fred Neumann, chief Asia economist at HSBC.

    “That said, as household incomes increase with economic development and as households become older, the demand for services should grow faster than that for goods.”

    China’s economy grew 5% last year, matching the government’s target, by seizing a record share of global goods demand to offset weak domestic consumption, a ‍strategy that blunted the impact of U.S. tariffs.

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  • Japan’s Cabinet OKs record defense budget that aims to deter China

    Japan’s Cabinet on Friday approved a record defense budget plan exceeding 9 trillion yen ($58 billion) for the coming year, aiming to fortify its strike-back capability and coastal defense with cruise missiles and unmanned arsenals as tensions rise in the region.The draft budget for fiscal 2026, beginning April, is up 9.4% from 2025 and marks the fourth year of Japan’s ongoing five-year program to double annual arms spending to 2% of gross domestic product.“It is the minimum needed as Japan faces the severest and most complex security environment in the postwar era,” Defense Minister Shinjiro Koizumi said, stressing his country’s determination to pursue military buildup and protect its people.“It does not change our path as a peace-loving nation,” he said.The increase comes as Japan faces elevated tension from China. Japanese Prime Minister Sanae Takaichi said in November that her country’s military could get involved if China were to take action against Taiwan, the self-governing island that Beijing says must come under its rule.Takaichi’s government, under U.S. pressure for a military increase, pledged to achieve the 2% target by March, two years earlier than planned. Japan also plans to revise its ongoing security and defense policy by December 2026 to further strengthen its military.Missiles and drones will add to southwestern island defenseJapan has been bolstering its offensive capability with long-range missiles to attack enemy targets from a distance, a major break from its post-World War II principle limiting the use of force to its own self-defense.The current security strategy, adopted in 2022, names China as the country’s biggest strategic challenge and calls for a more offensive role for Japan’s Self-Defense Force under its security alliance with the U.S.The new budget plan allocates more than 970 billion yen ($6.2 billion) to bolster Japan’s “standoff” missile capability. It includes a 177 billion yen ($1.13 billion) purchase of domestically developed and upgraded Type-12 surface-to-ship missiles with a range of about 1,000 kilometers (620 miles).The first batch of the Type-12 missiles will be deployed in Japan’s southwestern Kumamoto prefecture by March, a year earlier than planned, as Japan accelerates its missile buildup in the region.The government believes unmanned weapons are essential, in part due to Japan’s aging and declining population and its struggles with an understaffed military.To defend the coasts, Japan will spend 100 billion yen ($640 million) to deploy “massive” unmanned air, sea-surface and underwater drones for surveillance and defense under a system called SHIELD planned for March 2028, defense ministry officials said.For speedier deployment, Japan initially plans to rely mainly on imports, possibly from Turkey or Israel.Tension with China growsThe budget announcement comes as Japan’s row with China escalates following Takaichi’s remark in November that the Japanese military could get involved if China were to take action against Taiwan, the self-governing island that Beijing claims as its own.The disagreement escalated this month when Chinese aircraft carrier drills near southwestern Japan prompted Tokyo to protest when Chinese aircraft locked their radar on Japanese aircraft, which is considered possible preparation for firing missiles.The Defense Ministry, already alarmed by China’s rapid expansion of operations in the Pacific, will open a new office dedicated to studying operations, equipment and other necessities for Japan to deal with China’s Pacific activity.Two Chinese aircraft carriers were spotted in June, almost simultaneously operating near the southern Japanese island of Iwo Jima for the first time, fueling Tokyo’s concern about Beijing’s rapidly expanding military activity far beyond its borders and areas around the disputed East China Sea islands.In Beijing, China’s Foreign Ministry spokesperson Lin Jian said the Takaichi government has “noticeably accelerated its pace of military buildup and expansion” since taking office.”Japan is deviating from the path of peaceful development it has long claimed to uphold and is moving further and further in a dangerous direction,” Lin said.Japan plans joint development of frigates and jetsJapan is pushing to strengthen its largely domestic defense industry by participating in joint development with friendly nations and promoting foreign sales after drastically easing arms export restrictions in recent years.For 2026, Japan plans to spend more than 160 billion yen ($1 billion) to jointly develop a next-generation fighter jet with Britain and Italy for deployment in 2035. There are also plans for research and development of artificial intelligence-operated drones designed to fly with the jet.In a major boost to the country’s defense industry, Australia selected Mitsubishi Heavy Industries in August to upgrade the Mogami-class frigate to replace its fleet of 11 ANZAC-class ships.Japan’s budget allocates nearly 10 billion yen ($64 million) to support industry base and arms sales.Meeting targets but future funding uncertainThe budget plan requires parliamentary approval by March to be implemented as part of a 122.3 trillion yen ($784 billion) national budget bill.The five-year defense buildup program would bring Japan’s annual spending to around 10 trillion yen ($64 billion), making it the world’s third-largest spender after the U.S. and China. Japan will clear the 2% target by March as promised, the Finance Ministry said.Takaichi’s government plans to fund its growing military spending by raising corporate and tobacco taxes and recently adopted a plan for an income tax increase beginning in 2027. Prospects for future growth at a higher percentage of GDP are unclear.

    Japan’s Cabinet on Friday approved a record defense budget plan exceeding 9 trillion yen ($58 billion) for the coming year, aiming to fortify its strike-back capability and coastal defense with cruise missiles and unmanned arsenals as tensions rise in the region.

    The draft budget for fiscal 2026, beginning April, is up 9.4% from 2025 and marks the fourth year of Japan’s ongoing five-year program to double annual arms spending to 2% of gross domestic product.

    “It is the minimum needed as Japan faces the severest and most complex security environment in the postwar era,” Defense Minister Shinjiro Koizumi said, stressing his country’s determination to pursue military buildup and protect its people.

    “It does not change our path as a peace-loving nation,” he said.

    The increase comes as Japan faces elevated tension from China. Japanese Prime Minister Sanae Takaichi said in November that her country’s military could get involved if China were to take action against Taiwan, the self-governing island that Beijing says must come under its rule.

    Takaichi’s government, under U.S. pressure for a military increase, pledged to achieve the 2% target by March, two years earlier than planned. Japan also plans to revise its ongoing security and defense policy by December 2026 to further strengthen its military.

    Missiles and drones will add to southwestern island defense

    Japan has been bolstering its offensive capability with long-range missiles to attack enemy targets from a distance, a major break from its post-World War II principle limiting the use of force to its own self-defense.

    The current security strategy, adopted in 2022, names China as the country’s biggest strategic challenge and calls for a more offensive role for Japan’s Self-Defense Force under its security alliance with the U.S.

    The new budget plan allocates more than 970 billion yen ($6.2 billion) to bolster Japan’s “standoff” missile capability. It includes a 177 billion yen ($1.13 billion) purchase of domestically developed and upgraded Type-12 surface-to-ship missiles with a range of about 1,000 kilometers (620 miles).

    The first batch of the Type-12 missiles will be deployed in Japan’s southwestern Kumamoto prefecture by March, a year earlier than planned, as Japan accelerates its missile buildup in the region.

    The government believes unmanned weapons are essential, in part due to Japan’s aging and declining population and its struggles with an understaffed military.

    To defend the coasts, Japan will spend 100 billion yen ($640 million) to deploy “massive” unmanned air, sea-surface and underwater drones for surveillance and defense under a system called SHIELD planned for March 2028, defense ministry officials said.

    For speedier deployment, Japan initially plans to rely mainly on imports, possibly from Turkey or Israel.

    Tension with China grows

    The budget announcement comes as Japan’s row with China escalates following Takaichi’s remark in November that the Japanese military could get involved if China were to take action against Taiwan, the self-governing island that Beijing claims as its own.

    The disagreement escalated this month when Chinese aircraft carrier drills near southwestern Japan prompted Tokyo to protest when Chinese aircraft locked their radar on Japanese aircraft, which is considered possible preparation for firing missiles.

    The Defense Ministry, already alarmed by China’s rapid expansion of operations in the Pacific, will open a new office dedicated to studying operations, equipment and other necessities for Japan to deal with China’s Pacific activity.

    Two Chinese aircraft carriers were spotted in June, almost simultaneously operating near the southern Japanese island of Iwo Jima for the first time, fueling Tokyo’s concern about Beijing’s rapidly expanding military activity far beyond its borders and areas around the disputed East China Sea islands.

    In Beijing, China’s Foreign Ministry spokesperson Lin Jian said the Takaichi government has “noticeably accelerated its pace of military buildup and expansion” since taking office.

    “Japan is deviating from the path of peaceful development it has long claimed to uphold and is moving further and further in a dangerous direction,” Lin said.

    Japan plans joint development of frigates and jets

    Japan is pushing to strengthen its largely domestic defense industry by participating in joint development with friendly nations and promoting foreign sales after drastically easing arms export restrictions in recent years.

    For 2026, Japan plans to spend more than 160 billion yen ($1 billion) to jointly develop a next-generation fighter jet with Britain and Italy for deployment in 2035. There are also plans for research and development of artificial intelligence-operated drones designed to fly with the jet.

    In a major boost to the country’s defense industry, Australia selected Mitsubishi Heavy Industries in August to upgrade the Mogami-class frigate to replace its fleet of 11 ANZAC-class ships.

    Japan’s budget allocates nearly 10 billion yen ($64 million) to support industry base and arms sales.

    Meeting targets but future funding uncertain

    The budget plan requires parliamentary approval by March to be implemented as part of a 122.3 trillion yen ($784 billion) national budget bill.

    The five-year defense buildup program would bring Japan’s annual spending to around 10 trillion yen ($64 billion), making it the world’s third-largest spender after the U.S. and China. Japan will clear the 2% target by March as promised, the Finance Ministry said.

    Takaichi’s government plans to fund its growing military spending by raising corporate and tobacco taxes and recently adopted a plan for an income tax increase beginning in 2027. Prospects for future growth at a higher percentage of GDP are unclear.

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  • China’s president Xi caught knifing Trump in brutal attack just hours after historic summit

    For a moment, it looked like President Trump and China President Xi Jinping had buried the hatchet at APEC. 

    Then, just as eyes turned away from the Korean summit, Xi picked up an ax.  

    Trump celebrated his high-profile breakthrough with Beijing as a victory on tariffs, a promise of massive soybean purchases and an agreement to stop the flow of the chemicals that fuel fentanyl. 

    But by the next day, the smiles had vanished as Xi used his closing remarks to take an unmistakable swipe at his American rival. 

    In a pointed message delivered to business leaders, Xi took a thinly veiled swipe at Washington’s trade policies—positioning China as the champion of free markets while warning regional partners against joining America’s campaign to decouple from Chinese supply chains.

    ‘APEC economies should oppose protectionism, resist unilateral bullying and prevent the world from returning to the law of the jungle,’ he declared—words experts widely interpreted as a direct rebuke of Trump’s approach to trade. 

    This was a stark contrast to how Xi responded to Trump during their face-to-face meeting. ‘China and the US should be partners and friends,’ President Xi said during their summit. ‘This is what history has taught us and what reality demands.’

    Brent Sadler, a former military diplomat with decades of experience in Asia, believes that Xi’s post–summit remarks were both a response to the meeting and an assertion of China‘s growing power. 

    China’s President Xi Jinping speaks during the Asia–Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea

    US President Donald Trump and Chinese President Xi Jinping pose for photos ahead of a bilateral meeting at Gimhae Air Base on October 30, 2025 in Busan, South Korea. Trump is meeting Xi for the first time since taking office for his second term, following months of growing tension between both countries

    US President Donald Trump and Chinese President Xi Jinping pose for photos ahead of a bilateral meeting at Gimhae Air Base on October 30, 2025 in Busan, South Korea. Trump is meeting Xi for the first time since taking office for his second term, following months of growing tension between both countries

    Chinese President Xi Jinping waves to the press as he walks with US President Donald Trump at the Mar-a-Lago estate in West Palm Beach, Florida, back in 2017

    Chinese President Xi Jinping waves to the press as he walks with US President Donald Trump at the Mar–a–Lago estate in West Palm Beach, Florida, back in 2017

    Trump takes part in a welcoming ceremony with Xi Jinping on November 9, 2017 in Beijing, China on a 10-day trip to Asia

    Trump takes part in a welcoming ceremony with Xi Jinping on November 9, 2017 in Beijing, China on a 10–day trip to Asia

    ‘Trump very clearly set the stage for this meeting, flexing his position,’ Sadler said. ‘What we saw after the summit was Xi returning to familiar rhetoric. It wasn’t hostile, but it wasn’t friendly. It was more of a cold, businesslike engagement, and Xi was clearly sending a message.’

    Sadler described Xi’s comments as ‘catty,’ adding, ‘It wasn’t just a swipe; it was almost like a threat. Xi was telling others not to side with the Americans, which is a strategic move to reinforce China’s influence in the region.’ 

    This, according to Sadler, reveals the true nature of the US–China relationship — not a friendship, but a complex and tense negotiation, where both sides are playing a long game.

    This isn’t the first time the two sides have made a deal, only for it to unravel shortly after. The last agreement struck between China and the US was effectively discarded just months after being put in place. 

    ‘I have seen this movie before,’ Sadler said. ‘Promises from Beijing have often been made, but not followed through on. We’ll see if this time is any different.’ 

    Asia–region analysts tell Daily Mail that while Trump’s team may have secured some initial concessions, it remains to be seen whether these will hold up over the long term – skeptical of China’s ability to meet it’s commitments on issues like fentanyl control and export controls. 

    ‘The US needs to ensure China adheres to its commitments. The handshake deal in South Korea is only meaningful if it’s followed up with action. Trump’s team needs to keep the pressure on,’ Sadler added.

    The next big summit between Trump and Xi, expected in April, will likely reveal whether these trade talks can move beyond the surface –– and if history is any indicator –– if a part of their agreement derails. 

    A former senior Biden administration official tells the Daily Mail it’s hard to see the deal stick. One tell: No text of a joint agreement was ever released. 

    ‘President Xi has been willing to push back against Trump, so I could see him changing terms of the deal if Trump posts something in the middle of the night on X with an entirely new policy,’ the Senior Administration official said. 

    Asked for a response to Xi, a White House aide noted that the US is also playing the long game.   

    ‘We’re a threat to them, too… I think we get along very well, and I think we can be bigger, better and stronger by working with them as opposed to just knocking them out,’ the official said. 

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  • Congress would target China with new restrictions in massive defense bill

    WASHINGTON (AP) — The Trump administration may have softened its language on China to maintain a fragile truce in their trade war, but Congress is charging ahead with more restrictions in a defense authorization bill that would deny Beijing investments in highly sensitive sectors and reduce U.S. reliance on Chinese biotechnology companies.

    Included in the 3,000-page bill approved Wednesday by the House is a provision to scrutinize American investments in China that could help develop technologies to boost Chinese military power. The bill, which next heads to the Senate, also would prohibit government money to be used for equipment and services from blacklisted Chinese biotechnology companies.

    In addition, the National Defense Authorization Act would boost U.S. support for the self-governing island of Taiwan that Beijing claims as its own and says it will take by force if necessary.

    “Taken together, these measures reflect a serious, strategic approach to countering the Chinese Communist Party,” said Rep. Raja Krishnamoorthi, the top Democrat on the House Select Committee on the Chinese Communist Party. He said the approach “stands in stark contrast to the White House’s recent actions.”

    Congress moves for harsher line toward China

    The compromise bill authorizing $900 billion for military programs was released two days after the White House unveiled its national security strategy. The Trump administration dropped Biden-era language that cast China as a strategic threat and said the U.S. “will rebalance America’s economic relationship with China,” an indication that President Donald Trump is more interested in a mutually advantageous economic relationship with Beijing than in long-term competition.

    The White House this week also allowed Nvidia to sell an advanced type of computer chip to China, with those more hawkish toward Beijing concerned that would help boost the country’s artificial intelligence.

    The China-related provisions in the traditionally bipartisan defense bill “make clear that, whatever the White House tone, Capitol Hill is locking in a hard-edged, long-term competition with Beijing,” said Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, a Washington-based think tank.

    If passed, these provisions would “build a floor under U.S. competitiveness policy — on capital, biotech, and critical tech — that will be very hard for future presidents to unwind quietly,” he said.

    The Chinese embassy in Washington on Wednesday denounced the bill.

    “The bill has kept playing up the ‘China threat’ narrative, trumpeting for military support to Taiwan, abusing state power to go after Chinese economic development, limiting trade, economic and people-to-people exchanges between China and the U.S., undermining China’s sovereignty, security and development interests and disrupting efforts of the two sides in stabilizing bilateral relations,” said Liu Pengyu, the embassy spokesperson.

    “China strongly deplores and firmly opposes this,” Liu said.

    US investments in China

    U.S. policymakers and lawmakers have been working for several years toward bipartisan legislation to curb investments in China when it comes to cutting-edge technologies such as quantum computing, aerospace, semiconductors and artificial intelligence. Those efforts flopped last year when Tesla CEO Elon Musk opposed a spending bill.

    Musk has extensive business interests in China, including a Tesla gigafactory in the eastern city of Shanghai.

    The provision made it into the must-pass defense policy bill, welcomed by Rep. John Moolenaar, a Michigan Republican who chairs the House Select Committee on the Chinese Communist Party.

    “For too long, the hard-earned money of American retirees and investors has been used to build up China’s military and economy,” he said. “This legislation will help bring that to an end.”

    Biosecurity protections

    Congress last year failed to pass the BIOSECURE Act, which cited national security in preventing federal money from benefiting a number of Chinese biotechnology companies. Critics said then that it was unfair to single out specific companies, warning that the measure would delay clinical trials and hinder development of new drugs, raise costs for medications and hurt innovation.

    The provision in the NDAA no longer names companies but leaves it to the Office of Management and Budget to compile a list of “biotechnology companies of concern.” The bill also would expand Pentagon investments in biotechnology.

    Moolenaar lauded the effort for taking “defensive action to secure American pharmaceutical supply chains and genetic information from malign Chinese companies.”

    Support for Taiwan

    The defense bill also would authorize an increase in funding, to $1 billion from $300 million this year, for Taiwan-related security cooperation and direct the Pentagon to establish a joint drone and anti-drone program.

    Another provision supports Taiwan’s bid to join the International Monetary Fund, which would provide the self-governing island with financial protection from China.

    It comes amid mixed signals from Trump, who appears careful not to upset Beijing as he seeks to strike trade deals with Chinese President Xi Jinping. The Chinese leader has urged Trump to handle the Taiwan issue “with prudence,” as Beijing considers its claim over Taiwan a core interest.

    In the new national security strategy, the White House says the U.S. does not support any unilateral change to the status quo in the Taiwan Strait and stresses that the U.S. should seek to deter and prevent a large-scale military conflict.

    “But the American military cannot, and should not have to, do this alone,” the document says, urging Japan and South Korea to increase defense spending.

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  • Chris Mason: Is this what spying by China can look like?

    When MPs, members of the House of Lords and their staff were warned about the threat from Chinese spies, in one office in Westminster, a quick check began.

    Simon Whelband is a Conservative councillor and also works for the Conservative MP Neil O’Brien, who was sanctioned by China in 2021.

    Simon went into his LinkedIn messages and there it was. A message from an account in the name of Shirly Shen sent some weeks earlier.

    He hadn’t responded to the unsolicited message and reported it to Parliament’s security services. He was then advised to block the account.

    The note comes across as pretty innocuous.

    He said: “The message wasn’t written in very good English, it was a message to say there was a job opportunity and was I interested, and to get in touch if I was.

    “I’ve worked around Parliament for about 10 years now so I’m kind of used to this.

    “But if you were more junior, you don’t know what you’re looking for.

    “You might think it’s a genuine offer that’s made to you on LinkedIn, they might accept.”

    Whelband added that he thought it was becoming more common for those working in Parliament to be targeted by China.

    “They have realised the way to get to Parliamentarians is through their staff… it’s deeply worrying,” he said.

    And so, for the second time this autumn, Westminster is collectively wrestling with what to do about China.

    The growing influence of this vast superpower is one of the two stand out global changes of the last 30 years, alongside the growth of the internet.

    Some of the most acute challenges – or threats – from Beijing come when both of these mega-trends of the early 21st Century combine.

    Senior figures in government are worried, but express their worry carefully in public. MPs outside of government are much more willing to be blunt.

    Tuesday’s debate in the Commons on this was an eye opener. The security minister Dan Jarvis was both circumspect in his language, but warm and accepting of the wide range of concerns expressed by MPs of multiple parties.

    Among them:

    • Concern that buses manufactured in China but driving on British streets might be equipped with a so-called “kill switch” which allows someone in China to press a button and disable the bus – potentially causing chaos

    • Worries about vehicles used by the military that are made in China and might be mobile listening devices – to such an extent that military figures have been warned to watch what they are saying when they are on board in case China is listening

    • Deep concern about China seeking planning permission for a huge new embassy in central London which critics say will be a spying centre and is located very close to sensitive data cables that serve the City of London

    Last month, Parliament was digesting the collapse of a court case involving two men accused of spying for China, one of whom had worked in Westminster. Both men always denied any wrongdoing.

    Now it is the warning that all MPs and members of the House of Lords have received from the security service MI5 that they might be Beijing’s next target.

    It says it has identified two LinkedIn profiles used by Chinese security services to act as “civilian recruitment headhunters”, targeting individuals working in British politics to solicit “insider insights”.

    As Jarvis put it, China “has a low threshold for information it regards as valuable”. This is because over time it builds up a wider picture by piecing together the morsels it may extract from a wide range of people.

    Labour, since they won the general election, have attempted to warm up the UK’s relationship with China.

    The Chancellor Rachel Reeves has been to Beijing, as has the Business Secretary Peter Kyle, who was there in September within days of being appointed to the role. The most senior civil servant in the Foreign Office, Sir Olly Robbins, was there last month in the midst of all those headlines about the collapsed spying trial.

    But there has long been a vociferous collection of China hawks in Parliament, who have long worried about what they see as a collective naivety about Beijing.

    The question now is whether a moment like this, following MI5’s intervention, persuades others to share their outlook.

    The government insists its approach to China is “pragmatic”: it regards working with Beijing as inevitable but insists it is “clear eyed” about the risks.

    Will a growing number of MPs demand a more sceptical outlook?

    As one put it, rather colourfully, “you can’t reason with a tiger when your head is in its mouth”.

    China is a vast superpower that is at once essential yet awkward, unavoidable yet dangerous.

    This the latest case study in those competing interests. There will be more to come.

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  • Deal between the US and China is undoing damage from a self-inflicted trade war

    BUSAN, South Korea (AP) — Three-digit tariffs are off the table, but import duties on each other are higher than in January.

    Rare earth materials will flow more smoothly, but China has put in place an export permitting regime that it can tighten or loosen as needed.

    Port fees will go away, but only for one year.

    And Beijing is again buying U.S. soybeans after it had abruptly cut off American farmers.

    After months of posturing, arguing and threatening, U.S. President Donald Trump and Chinese leader Xi Jinping have essentially turned back the clock. While the meeting between the two leaders was hailed by Trump as a “roaring success,” the agreement that came out of it may only serve to undo some of the damages Trump inflicted with his trade war upon his return to the White House.

    “It is hard to see what major gains the U.S. has made in the bilateral relationship relative to where things stood before Trump took office,” said Eswar Prasad, an economist at Cornell University.

    On the Senate floor, Minority Leader Chuck Schumer on Thursday denounced the deal out of South Korea as leaving the U.S. as “no better off.”

    “If anything, things are worse: Prices have gone up and China has agreed to nothing of substance that will improve trade between our nations,” the Democrat senator said, adding that Trump “started a trade war, created a giant mess for businesses, consumers, and soybean farmers, and then he celebrates for trying to clean up the very mess he created in the first place.”

    Nevertheless, the deal has injected a degree of stability, giving the world’s two largest economies — as well as the rest of the world — time and room to readjust.

    Washington and Beijing still need to finalize their agreements, a process that always has the potential for fresh disputes. But for now, Xi appears interested in moving past the latest tensions.

    In an official statement, Xi referred to “recent twists and turns” that “offered some lessons for both sides.” He said they should be “focusing on the benefits of cooperation rather than falling into a vicious cycle of mutual retaliation.”

    Both sides reduce tariffs, resume soybean sales to China

    Trump fired the first shot in the trade war in February when he imposed an additional 10% tariff on Chinese goods over the allegation that Beijing failed to stem the flow of chemicals used to make fentanyl. That soared to as much as 145% after China retaliated, but Trump walked it back following market meltdowns.

    The two sides in May slashed their massive tariffs to 10% on each other, while Washington retained the 20% fentanyl-related tariff, and China its retaliatory tariffs of 10% or 15% on U.S. farm goods.

    Now, Trump said he has removed one 10% fentanyl tariff in exchange for Beijing’s cooperation in fighting the illicit drug.

    U.S. Secretary of Agriculture Brooke Rollins said China would also withdraw the retaliatory tariffs on U.S. agricultural products. A spokesperson for the Chinese Ministry of Commerce said Beijing would “adjust accordingly” its countermeasures without giving details.

    In addition, China has agreed to buy 12 million metric tons of U.S. beans through January, and will buy at least 25 million metric tons annually for next three years, Rollins said on Thursday.

    That compares to China buying 17 million metric tons of U.S. soybeans in the first eight months of this year but importing zero in September. In 2024, China bought 22 million metric tons of U.S. soybeans, according to state media.

    Although China did not confirm the details of the latest soybean deal, the spokesperson for the Chinese commerce ministry said the two sides have reached “consensus” to expand agricultural trade.

    One-year truce on export controls and port fees

    In April, China used its monopoly power in the processing of critical minerals to institute a permitting requirement for the export of several rare earth elements. On October 9, Beijing expanded the export rules, apparently in response to the U.S. decision to extend export controls to businesses affiliated with already-blacklisted foreign companies.

    Furious, Trump threatened to impose a new 100% tariff on China, but the two sides managed to cool down in time for Trump to meet Xi in South Korea.

    Beijing on Thursday said it would pause for a year the rare earth export rules from October to “conduct research to refine specific plans,” while the U.S. will suspend its affiliate rule for one year.

    The delay by Beijing “provides just enough time for the United States to accelerate investment in capabilities and innovation for rare earths and permanent magnets,” said Wade Senti, president of the U.S. permanent magnet company AML. “This needs to be on warp speed and at a scale never seen before since the COVID-19 response,” he said.

    Another fresh thorn was the U.S. introduction of port fees in October targeting China-linked vessels, as part of a plan to restore America’s shipbuilding capabilitie s. Beijing answered with countermeasures against the U.S.

    The port fees on each other are not removed but will be suspended for one year, the Chinese commerce ministry said.

    The future is still uncertain

    Whether Trump accepts a return to the status quo or pushes to address fundamental issues that have persisted for years between the U.S. and China remains unclear. Nothing about Thursday’s meeting — the first between Trump and Xi in six years — affects Chinese manufacturing dominance that Trump has blamed for the loss of American blue collar jobs.

    Sean Stein, president of the U.S.-China Business Council, called the latest developments “very encouraging” and added: “We hope that future negotiations will address long-standing market access barriers, help level the playing field for U.S. companies, and bring long-term predictability to the bilateral trade relationship.”

    There are more opportunities on the horizon to keep working on these challenges. Trump said he will go to China in April and Xi will visit the U.S. after that.

    If Trump isn’t successful, this period could be remembered for a lot of sound and fury but no change in the basic trajectory of China’s ascendant economy.

    “Generally, Trump grows impatient with anything beyond the immediate, and it is the Chinese that play for longer term advantage,” said Kurt Campbell, a former deputy secretary of state in the Biden administration and now chairman of The Asia Group.

    ___

    Tang and Wiseman reported from Washington. AP writer Josh Funk in Omaha, Neb., contributed to the report

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  • China says it will work with US to resolve issues related to TikTok

    President Donald Trump’s meeting Thursday with China’s top leader Xi Jinping produced a raft of decisions to help dial back trade tensions, but no agreement on TikTok’s ownership.

    “China will work with the U.S. to properly resolve issues related to TikTok,” China’s Commerce Ministry said after the meeting.

    It gave no details on any progress toward ending uncertainty about the fate of the popular video-sharing platform in the U.S.

    The Trump administration had been signaling that it may have finally reached a deal with Beijing to keep TikTok running in the U.S.

    Treasury Secretary Scott Bessent had said on CBS’s “Face the Nation” on Sunday that the two leaders will “consummate that transaction on Thursday in Korea.”

    Wide bipartisan majorities in Congress passed — and President Joe Biden signed — a law that would ban TikTok in the U.S. if it did not find a new owner to replace China’s ByteDance. The platform went dark briefly on a January deadline but on his first day in office, Trump signed an executive order to keep it running while his administration tries to reach an agreement for the sale of the company.

    Three more executive orders followed, as Trump, without a clear legal basis, extended deadlines for a TikTok deal. The second was in April, when White House officials believed they were nearing a deal to spin off TikTok into a new company with U.S. ownership. That fell apart when China backed out after Trump announced sharply higher tariffs on Chinese products. Deadlines in June and September passed, with Trump saying he would allow TikTok to continue operating in the United States in a way that meets national security concerns.

    Trump’s order was meant to enable an American-led group of investors to buy the app from China’s ByteDance, though the deal also requires China’s approval.

    However, TikTok deal is “not really a big thing for Xi Jinping,” said Bonnie Glaser, managing director of the German Marshall Fund’s Indo-Pacific program, during a media briefing Tuesday. “(China is) happy to let (Trump) declare that they have finally kept a deal. Whether or not that deal will protect the data of Americans is a big question going forward.”

    “A big question mark for the United States, of course, is whether this is consistent with U.S. law since there was a law passed by Congress,” Glaser said.

    About 43% of U.S. adults under the age of 30 say they regularly get news from TikTok, higher than any other social media app, including YouTube, Facebook and Instagram, according to a Pew Research Center report published in September.

    A recent Pew Research Center survey found that about one-third of Americans said they supported a TikTok ban, down from 50% in March 2023. Roughly one-third said they would oppose a ban, and a similar percentage said they weren’t sure.

    Among those who said they supported banning the social media platform, about 8 in 10 cited concerns over users’ data security being at risk as a major factor in their decision, according to the report.

    The security debate centers on the TikTok recommendation algorithm — which has steered millions of users into an endless stream of video shorts. China has said the algorithm must remain under Chinese control by law. But a U.S. regulation that Congress passed with bipartisan support said any divestment of TikTok would require the platform to cut ties with ByteDance.

    American officials have warned the algorithm — a complex system of rules and calculations that platforms use to deliver personalized content — is vulnerable to manipulation by Chinese authorities, but no evidence has been presented by U.S. officials proving that China has attempted to do so.

    ___

    Associated Press Writer Fu Ting contributed to this story from Washington.

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  • Tensions remain high as China and EU prepare Brussels meeting on rare earths

    A planned meeting between EU Trade Commissioner Maros Šefčovič and his Chinese counterpart was cancelled on Friday, as the European Commission opted for expert-level talks to defuse tensions over Beijing’s rare-earth export controls, which EU leaders are calling economic coercion.

    The get-together will be held both online and in person in Brussels, as the Commission has been under pressure since Thursday night from the 27 member states, who have called on it to work on a strong response to the unfair trade practices of international partners — first and foremost, China.

    The announcement comes right after a trip to Beijing by German foreign minister Johann Wadephul was also cancelled, as a spokesperson for his ministry said on Friday, without specifying whether it was China or Germany that called off the trip.

    Beijing is accused by its European counterparts of weaponising rare earth exports, for which it has imposed a Kafkaesque licensing regime since 9 October.

    These minerals are key for EU industries, such as the automotive, defence, Greentech and digital sectors.

    “It is economic coercion,” French President Emmanuel Macron said Thursday after a European summit, but without specifically recommending the use of what is considered a trade defence “nuclear option,” the “Anti-Coercion Instrument”.

    In response to Chinese trade threats, Europeans adopted in 2023 a toolkit to counter third-country state pressure through measures such as tariffs or restrictions on access to public procurement, licenses, or intellectual property rights.

    To trigger it, a qualified majority of the 27 member states is required, which is not guaranteed given their differing views.

    Pressure from the EU’s 27 members

    “We talked about the anti-coercion Instrument, but we did not make any decision,” German Chancellor Friedrich Merz said after the summit.

    Not all member states defend the same interests vis-à-vis the Asian giant, given their economic ties with Beijing.

    Under pressure from France, however, the 27 leaders agreed in their conclusions of the EU summit on the need for the Commission “to make effective use of all EU economic instruments” to deter or counter external threats.

    Related

    Because the China issue continues to grow for the EU, Macron pointed to “a Chinese economy that invests heavily, following a logic of dumping.”

    Dumping allows China to sell its products cheaply on the European market than on its domestic one.

    Europeans, particularly in the steel sector, are experiencing this as they contend with China’s production surplus.

    Facing US tariffs, Beijing also redirect its exports toward the European market, Macron said, putting additional pressure on the EU.

    “Investigations need to be launched to look into this, and a much more systematic approach to economic security is required,” the French president added.

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  • Opinion | Britain’s Do-It-Yourself Version of Chinese Sabotage

    A ‘spying’ case that may have been a mistake all along sows more distrust than Beijing ever could.

    Joseph C. Sternberg

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  • In a race back to the moon, U.S. and China see a fast-approaching finish line

    Early in his first term, President Trump held a modest ceremony directing NASA to return humans to the moon for the first time in 50 years. It was a goalpost set without a road map. Veterans of the space community reflected on the 2017 document, conspicuously silent on budgets and timelines, equivocating between excitement and concern.

    Was Trump setting up a giveaway to special interests in the aerospace community? Or was he setting forth a real strategic vision for the coming decade, to secure American leadership in the heavens?

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    It was a return to a plan first proposed by President George W. Bush in 2004, then abandoned by President Obama in 2010, asserting the moon as a vital part of American ambitions in space. Whether to return to the lunar surface at all — or skip it to focus on Mars — was a long-standing debate governing the division of resources at NASA, where every project is precious, holding extraordinary promise for the knowledge of mankind, yet requiring consistent, high-dollar funding commitments from a capricious Congress.

    Eight years on, the debate is over. Trump’s policy shift has blazed a new American trail in space — and spawned an urgent race with China that is fast approaching the finish line.

    Both nations are in a sprint toward manned missions to the lunar surface by the end of this decade, with sights on 2029 as a common deadline — marking the end of Trump’s presidency and, in China, the 80th anniversary of the People’s Republic.

    A "What Will 2030 Look Like?" sign behind Sen. Ted Cruz with American and Chinese astronauts on the moon

    A “What Will 2030 Look Like?” sign behind Texas Republican Sen. Ted Cruz, who chairs the Commerce, Science, and Transportation Committee, during a confirmation hearing in April.

    (Kent Nishimura/Bloomberg via Getty Images)

    It is a far different race from the original, against the Soviet Union, when U.S. astronauts inspired the world with a televised landing in 1969. This time, Washington would not just plant a flag and return its astronauts home. Instead, the Americans plan to stay, establishing a lunar base that would test humanity’s ability to live beyond Earth.

    China has similar plans. And with both countries aiming for the same strategic area of the surface — the south pole of the moon, where peaks of eternal light shine alongside crevices of permanent darkness, believed to store frozen water — the stakes of the race are grounded in national security. Whichever nation establishes a presence there first could lay claim to the region for themselves.

    The world's first full-scale model of the crewed pressurized lunar rover

    The world’s first full-scale model of the crewed pressurized lunar rover, to be used in the Artemis moon exploration program, is displayed during a press preview in July.

    (Kazuhiro Nogi/AFP via Getty Images)

    Advocates of the U.S. effort, called the Artemis program, increasingly fear that delays at NASA and its private sector partners, coupled with proposed funding cuts to NASA from the Trump administration, could ensure China’s victory in a race with broad consequences for U.S. interests.

    So it is a race that Trump started. The question is whether he can finish it.

    While U.S. intelligence officials have assessed that Beijing is on track to meet its goals, NASA veterans say that accomplishing a manned mission before the Chinese appears increasingly out of reach.

    “It’s a stretch,” said G. Scott Hubbard, a leader in human space exploration for the last half-century who served as NASA’s first “Mars czar” and former director of the Ames Research Center in Mountain View, Calif. “Bottom line, yes, it is doable. It’ll take an intense effort by the best engineers, and appropriate funding.

    “It’s not inconceivable,” he added.

    Visitors take photos of a space suit during an event marking China's Space Day

    Visitors take photos of a space suit during an event marking China’s Space Day at the Harbin Institute of Technology in Harbin, capital of northeast China’s Heilongjiang province.

    (Wang Jianwei/Xinhua via Getty Images)

    The White House said Trump is committed to making “American leadership in space great again,” noting his first-term push to return U.S. astronauts to the moon and his efforts to deregulate the U.S. space industry. But officials declined to comment on a timeline for the mission or on China’s steady progress.

    “Being first and beating China to the moon matters because it sets the rules of the road,” Sean Duffy, Transportation secretary and acting NASA administrator, told The Times. “We’re committed to doing this right — safely, peacefully, and ahead of strategic competitors — because American leadership on the moon secures our future in space.”

    The success of the Artemis program, Duffy said, is about ensuring the United States leads in space for generations to come. “Those who lead in space lead on Earth,” he added.

    NASA officials, granted anonymity to speak candidly, expressed concern that while leadership on the Artemis program has remained relatively stable, talent on robotics and in other key areas has left the agency at a critical time in the race, with potentially less than two years to go before China launches its first robotic mission to the south pole — a scout, of sorts, for a manned landing to follow.

    A proposal to cut NASA research funding by roughly 47% has gripped officials there with doubt, jeopardizing a sense of job security at the agency and destabilizing a talent pipeline that could prove critical to success.

    In the 1960s, the federal government increased spending on NASA to 4.4% of GDP to secure victory in the first space race.

    “There’s too much uncertainty,” one NASA official said, raising the specter of the Trump administration impounding funds for the agency even if Congress continues to fund it.

    Inside NASA headquarters, Hubbard said, “the feeling right now is terrified uncertainty — everyone is walking on eggshells.”

    “They’re treading water,” he added. “People want to be given clear direction, and they’re not getting it.”

    A Smart Dragon-3 rocket carrying the Geely-05 constellation satellites lifts off from sea

    A Chinese Smart Dragon-3 rocket carrying satellites lifts off from sea on Sept. 9.

    (VCG/VCG via Getty Images)

    China’s long march gets closer

    Beijing conducted a series of tests over the last several weeks viewed in Washington as crucial milestones for China on its journey to the moon.

    A launch of its Lanyue lander, equipped to carry two taikonauts to the lunar surface, “validated” its landing and takeoff system, state media reported. Two subsequent tests of China’s Long March 10, a super-heavy lift rocket designed to jump-start the mission, were a “complete success,” according to the China Manned Space Agency.

    Unlike in the United States, China’s manned space flight program is housed within its military.

    “We have seen them steadily progress on all of the various pieces that they are going to need,” said Dean Cheng, senior advisor to the China program at the U.S. Institute of Peace.

    “You need a vehicle to launch, because current rockets simply don’t have enough throw-weight. They’re testing the lander to carry astronauts to the surface,” Cheng said. “These are key pieces, and significant advances — this is a brand new rocket and a lunar lander with new technology.”

    China initially set a goal for its manned mission by 2035, but has since moved up its plans, an expression of confidence from Beijing and an unusual break from typical party protocol. Now, China aims not only to have completed that mission, but to begin establishing an International Lunar Research Station on its surface, in conjunction with Russia, by 2030.

    They are expected to target the south pole.

    “There’s room for two powers under schemes of coordination, but there’s not room in an uncoordinated environment. There can easily be a competition for resources,” said Thomas González Roberts, an assistant professor of international affairs and aerospace engineering at the Georgia Institute of Technology.

    Landing and takeoff of spacecraft on the moon will kick up lunar dust and rocks, risking the safety of astronauts on the ground and sensitive equipment across a base site — considerations that are likely driving Beijing’s strategy to get there first. Those enjoying the benefits of first arrival could set up generous routes for rovers, equipment at dig sites for deposits, telecommunication assets, and even a nuclear reactor to assert a large area of domain.

    Since his first term, Trump and his aides have sought to avoid a showdown on the lunar surface, drafting a new set of international rules to govern an otherwise untamed frontier. The Artemis Accords “set out a practical set of principles to guide space exploration,” according to the State Department. President Biden embraced and extended the initiative, growing the list of signatories to 56 nations.

    But China is not one of them, prohibited by Congress during the Obama era from cooperating with the United States in space after attempting to steal U.S. technology on intercontinental ballistic missiles and thermonuclear weapons. Instead, Beijing has recruited a small list of countries to join its lunar base program, including Russia, Venezuela, Pakistan, Egypt, Nicaragua, Belarus and South Africa.

    “I don’t think there will be extreme congestion on the moon, but if you really define an area of interest — and there is that, with these peaks of eternal light next to permanently shadowed regions — you could manufacture congestion,” Roberts added.

    “How do you benefit from obfuscation?” he asked. “If you’re the first arrival, you spread yourself out.”

    A SpaceX Falcon 9 rocket lifts off from launchpad 40 at the Cape Canaveral Space Force Station

    A SpaceX Falcon 9 rocket lifts off from launch pad 40 at Cape Canaveral, carrying Northrop Grumman’s Cygnus XL cargo spacecraft toward the International Space Station.

    (Manuel Mazzanti/NurPhoto via Getty Images)

    The promise and burden of Musk’s Starship

    Last month, Duffy warned NASA staff that the Trump administration suspects Beijing is planning to deliver a nuclear reactor to power a long-term presence at its lunar base by 2029.

    The move, Duffy said, could allow China to “declare a keep-out zone, which would significantly inhibit the United States from establishing a planned Artemis presence if not there first.” He ordered the agency to collect proposals by October on delivering a U.S. reactor to the surface no later than that year.

    The administration’s success relies on a man whose relationship with Trump has crashed spectacularly to Earth.

    Starship, a super heavy-lift launch vehicle produced by Elon Musk’s SpaceX, is the rocket Trump is relying on to accomplish the Artemis mission. Yet repeated setbacks in the Starship program have raised alarm at NASA over its fundamental constitution. A concerning series of tests have already delayed the U.S. manned launch, known as Artemis III, toward the end of Trump’s term.

    Last month, in its 10th test flight, the rocket finally succeeded in a suborbital mission. But “Starship has yet to reach orbit,” Hubbard said, “and once it reaches orbit, they’ve got to demonstrate microgravity transfer of cryogenic propellant.”

    “That’s something that’s never been done before,” he added. “So to say that they’ll be ready to do all of that in two years is a real stretch.”

    Setbacks are common course in the history of the U.S. space program. But the success of China’s recent tests has shown the Trump administration that NASA and its partners have run out of time for further delays.

    Duffy said that Artemis II, a manned mission to orbit the moon, will take place early next year, overcoming a separate set of design flaws that faced Lockheed Martin’s Orion spacecraft. Artemis III would keep astronauts on the surface for more than a week and deliver payloads to help begin the foundation of a base.

    Whether the Trump administration will commit to the funding and leadership necessary for the mission is an open question. The White House declined to say who within the West Wing is leading the effort. Trump has not named a permanent NASA administrator for Senate confirmation.

    Success on the moon is meant to provide a testing ground and a launching pad for more ambitious, challenging manned missions to Mars. But Trump’s commitment to those ventures are equally in doubt. The administration has proposed canceling funds for a landmark program decades in the making to return samples from the red planet, despite a NASA announcement last week revealed it had discovered signs of ancient Martian life.

    “I’ve been on the inside of it — you waste enormous amounts of time just trying to find workarounds to get funding in to stay on schedule,” Hubbard said. “If you really, really want to beat the Chinese, give NASA the funding and some stability — because you’re not going to beat them if every day, week or month, there’s a different direction, a different budget, a different administrator.

    “And China may still win,” he said, adding: “It would be another claim that they’re the dominant power in the world.”

    Michael Wilner

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  • Kim Jong Un ramps up trade diplomacy with a Beijing appearance

    At a military parade in Beijing featuring China’s next-generation weaponry, another momentous scene was on display: Chinese President Xi Jinping standing side by side with Russian President Vladimir Putin and North Korean leader Kim Jong Un.

    Their joint appearance on Wednesday at a parade commemorating the end of World War II, is the first time that the leaders of the three countries have appeared together in public. It comes amid growing concern about the increasing collaboration of the “axis of upheaval,” a term that denotes China, Russia, Iran, and North Korea and their opposition to the U.S.-led world order.

    It marks Kim’s first foray into multilateral diplomacy since assuming power in 2011. While in the past the reclusive leader has tended to avoid overseas trips due to security concerns, he arrived Tuesday in Beijing on a heavily armored train known as “The Sun,” stepping out to a welcome that even Kim’s grandfather Kim Il Sung didn’t get as the last North Korean leader to attend the Victory Day parade in 1959.

    “The trip was an undeniable political victory for Kim Jong Un,” said Park Won-gon, a professor of North Korea studies at Seoul’s Ewha Womans University. “To be seen standing shoulder to shoulder with two superpowers in China is an incredibly powerful image of propaganda to show to North Korean residents.”

    Kim’s growing diplomatic ambitions have in recent years involved a defense pact with Russia and the deployment of North Korean soldiers to the war in Ukraine in exchange for technological and military assistance.

    In a statement posted on the website of North Korea’s foreign ministry a day before the parade, Vice Minister Pak Myong Ho accused the U.S. and other Western governments of openly inflicting “tyranny” against “countless countries around the world,” while expressing support for a new balance of power led by Beijing.

    Experts at South Korea’s Institute for National Security Strategy (INSS), a government think tank, say that Kim’s most pressing agenda item in Beijing will be reviving its economic exchange with China, which has slowed in recent years amid Beijing’s frustrations with Pyongyang’s ongoing nuclear missile program.

    “In economic matters, the importance of China’s assistance is absolute,” INSS researchers wrote in a report published ahead of the parade.

    While Moscow in recent years has reportedly violated U.N. sanctions to provide North Korea with assistance ranging from refined petroleum to military drones, China is by far North Korea’s largest trading partner, accounting for up to 98% of the latter’s exports in 2023, according to an analysis by the Seoul-based Korea Trade-Investment Promotion Agency.

    Noting that trade between North Korea and China currently sits at around 80% of pre-pandemic levels, the INSS researchers highlighted that the shortage of Chinese economic support — and once-steady tourist flows — was being acutely felt in places like the Wonsan Kalma resort, a newly opened beachside vacation destination that Kim called the country’s “greatest achievement” of 2025.

    Despite North Korea’s vocal embrace of the so-called “new Cold War” order, Russia and China have been reluctant to do the same, analysts said.

    “China doesn’t gain anything by forming a bloc with North Korea,” Park, the professor, said. “Xi Jinping knows all too well that at most, any attempt of this kind will at most be a loose gathering of countries who are positioned against the U.S. without any real power or the cohesiveness of a bloc.”

    In a joint statement issued after a meeting in May 2024, Putin and Xi said that the China-Russia partnership is “a more advanced form of interstate interaction compared to the military-political alliances of the Cold War era and not of a bloc or confrontational nature.”

    While a trilateral summit between the three leaders is widely regarded as unlikely for this reason, Kim’s appearance in Beijing may, on the other hand, provide the leverage he needs for a potential round two of summits with President Trump.

    “I think North Korea may be willing to discuss a rollback of its nuclear program and demanding in return things like a permanent end to any joint U.S.- South Korea military drills or halting the deployment of any strategic assets,” Park said.

    Though Trump expressed a willingness to sit down with Kim during a summit with South Korean president Lee Jae Myung last month, Park says that Pyongyang no longer sees the U.S.’ long-standing goal of North Korean denuclearization as a viable starting point — and that Kim’s parade appearance is likely to be seen as yet another vindication of that position.

    Max Kim

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  • Historian Miles Yu on Chinese military parade:

    Miles Yu, professor of East Asia, military and naval history at the United States Naval Academy, joins CBS News to share his thoughts on the massive military parade taking place in China.

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  • Putin and Xi sign around 20 agreements in show of unity

    Russian President Vladimir Putin signed some 20 deals with his Chinese counterpart Xi Jinping on a visit to Beijing on Tuesday that highlighted the two countries’ strong bilateral relations, according to reporting by Chinese news agency Xinhua.

    Among them was a legally binding memorandum for the construction of a new gas pipeline through Mongolia to China, announced by Gazprom chief Alexei Miller in Beijing and reported by Russian news agencies.

    Miller announced the agreement after a meeting between Putin, Xi and Mongolian President Ukhnaagiin Khürelsükh.

    The price of gas supplied via the Power of Siberia 2 pipeline would be lower than for Europe, Miller noted, pointing to reduced transport costs.

    Gazprom and the China National Petroleum Corporation also signed documents to boost gas deliveries through the existing Power of Siberia pipeline from 38 billion cubic metres per year to 44 billion cubic metres, according to the reports.

    The 6,700-kilometre-long Power of Siberia 2 pipeline, including 2,700 kilometres on Russian soil, is due to have a capacity of 50 billion cubic metres per year. The contract is set for 30 years, according to the Russian reports.

    Miller described the pipeline as the “largest, most extensive and capital-intensive gas project worldwide,” without giving details on the costs, which are estimated at tens of billions of dollars.

    The timeline for the construction of the new pipeline remains unclear. Negotiations on the Power of Siberia 2 pipeline have been ongoing for five years, with Moscow and Beijing unable to agree on the price.

    Visa-free travel trial for Russians

    Beijing and Moscow also agreed to a trial of visa-free travel for Russians with valid passports to China, Russia’s official TASS news agency reported.

    A Chinese Foreign Ministry official told TASS that the new regulation, which applies to stays of up to 30 days, will be in effect for a trial period of one year.

    Current rules permit Russians with diplomatic or official documentation to travel to China, and there is a bilateral agreement on visa-free group trips.

    The new regulation is to take effect on September 15.

    The leaders also signed other cooperation agreements in fields such as energy, aviation, artificial intelligence and agriculture.

    Visit sends signal to the West

    The two leaders were at pains to highlight their countries’ strong relations, which Putin described as being at an “unprecedentedly high level.”

    Xi said their ties had withstood the test of international change and could be further expanded, Xinhua reported.

    Putin, along with North Korean leader Kim Jong Un, is due to attend a large-scale military parade marking the 80th anniversary of the end of World War II in Beijing on Wednesday.

    In a similar show of support, Xi attended a Russian parade in Moscow marking the end of World War II in May.

    China is considered Russia’s most significant backer in the Ukraine war, since Beijing has not condemned Moscow’s actions and has put forward Russian demands in its own proposals for resolving the conflict.

    However, no details emerged on what Xi and Putin said about Russia’s war on Ukraine. Information from Beijing indicated that the two leaders discussed “regional issues of common interest.”

    Western countries accuse China of supplying Russia with goods that can be used for military purposes, thereby supporting the Russian arms industry.

    On Monday, Xi and Putin called for a new world order at the summit of the Shanghai Cooperation Organization (SCO). The Russia-friendly SCO is seen as a counterbalance to Western alliances, including NATO.

    Putin stated that the eurocentric and Euro-Atlantic model had become obsolete.

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  • Senior U.S. Senator visits Taiwan, calls it

    Taipei — The head of the U.S. Senate Armed Services Committee said Friday he was determined the United States and Taiwan remain “the best of friends,” calling the democratic island claimed by China a “free country,” as he visited with another American lawmaker.

    Republican Senators Roger Wicker and Deb Fischer arrived in Taipei on Friday for a two-day visit, as President Trump seeks to strike a trade deal with China — which insists Taiwan is part of its territory and has threatened to use force to annex it.

    China’s Foreign Ministry reiterated its long-time stance in a statement issued Friday as the American senators arrived in Taipei, saying it firmly opposed any official exchanges between the U.S. and Taiwan.

    “We come here from the United States bringing a message from the Congress of commitment, of long-term friendship and a determination that a free country like Taiwan absolutely has the right to remain free and preserve self-determination,” Wicker said during a news conference alongside Taiwan’s President Lai Ching-te at the presidential office, as shown in video published by the Reuters news agency.

    U.S. Senator Roger Wicker (R-Miss.) speaks during a joint news conference with Taiwanese President Lai Ching-te in Taipei, Taiwan, during an official visit on Aug. 29, 2025.

    Reuters


    China’s Foreign Ministry responded to a CBS News request for reaction to the language used by Wicker to describe Taiwan over the weekend, with a statement saying the senators’ visit to Taiwan “and the dissemination of erroneous remarks on Taiwan issues violate the one-China principle and the U.S.-China joint communiqués, undermine China’s sovereignty and territorial integrity, and send wrong signals to Taiwan independence forces.”

    The ministry statement voiced China’s “strong dissatisfaction” with the visit and the comments by Wicker, and said the “future of Taiwan must be decided by the 1.4 billion Chinese people, including the people of Taiwan. China will be reunified, and it must be reunified. This is an irreversible trend that no one or any organization can reverse.”  

    Even before Wicker spoke in Taipei, ministry spokesperson Guo Jiakun called the U.S. delegation’s visit “a serious violation” of the one-China principle, a U.S. policy adopted decades ago that recognizes Taiwan as part of China.

    A senior Trump administration official told CBS News on Friday that the White House’s stance on the one-China principle “remains the same as the first Trump Administration.”

    Wicker, who chairs the powerful Armed Services Committee and is a vocal supporter of Taiwan, said he and Fischer were visiting to better understand Taiwan’s needs, and they wanted to reiterate to Taiwan “our determination to remain the best of friends and to defend the freedom of everyone and both of our great countries.”

    china-taiwan-map-974952064.jpg

    Mainland China and territory controlled by the Chinese government is show in yellow, while territory claimed by, but not controlled by Beijing, including Taiwan, is depicted in brown on this map.

    Getty/iStock


    “It is our determination and our intention that Taiwan remain free and make its own decisions,” Wicker said after their talks with Lai. “Part of maintaining the freedoms that we have is enhanced cooperation militarily, enhanced cooperation with our defense industrial base, making the best use of those funds.”

    Since Mr. Trump returned to the White House in January, there have been growing jitters in Taipei over the strength of the Taiwan-U.S. relationship and Washington’s willingness to defend the island if China were to attack.

    Fischer said the U.S. Senate understands “the gravity of the challenges that Taiwan faces” and that a “stronger Taiwan means a stronger United States and vice versa.”

    While the U.S. stopped recognizing Taiwan as an independent state in the late 1970s, in favor of China, Washington has remained Taipei’s most important backer and biggest supplier of arms that it would need to defend itself from any theoretical attack by China.

    china-taiwan-military-exercise-april-2025.jpg

    A Chinese warship is seen sailing near Taiwan during military exercises announced by Beijing on April 1, 2025, in an image taken from video aired by China’s state-run CCTV television network.

    Reuters/CCTV


    That support has become increasingly crucial to Taiwan in recent years, as China’s President Xi Jinping has vowed to bring the island under Beijing’s control. China has increased military pressure with large-scale exercises and routine flights and naval excursions that test the democratic island’s air and sea boundaries.

    Ahead of the meeting with Wicker and Fischer, Lai said he hoped Taiwan and the U.S. would further “enhance cooperation,” and insisted the island and China were “not subordinate” to each other.

    Wicker and Fischer have been travelling in the Asia-Pacific region for the past week, stopping in Hawaii, Guam, Palau and the Philippines.

    U.S.-Taiwan ties have been strained since Mr. Trump took office and launched a global trade war and pressured governments in Europe and elsewhere to spend more on their own defense.

    The Trump administration reportedly denied permission for Lai to transit in New York as part of a planned official trip to Latin America this month after Beijing objected. Lai reportedly then cancelled the trip.

    Taiwan is also struggling to finalize a tariff deal with the U.S. after Washington imposed a temporary 20% levy that has alarmed the export-dependent island’s manufacturers.

    As those negotiations continue, Lai’s government has announced plans to increase defense spending to more than 3% of GDP next year and to 5% by 2030.

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  • North Korean leader Kim Jong Un will attend a military parade in Beijing next week

    North Korean leader Kim Jong Un will make his first visit to China in six years to attend a military parade next week, the two countries said Thursday, in an event that would bring him together with a group of world leaders for the first time since taking office in late 2011.Kim and Russian President Vladimir Putin will be among 26 foreign leaders who attend next Wednesday’s parade in Beijing to mark the 80th anniversary of the end of World War II and China’s resistance against Japan’s wartime aggressions, according to the Chinese Foreign Ministry.“We warmly welcome General Secretary Kim Jong Un to China to attend the commemorative events,” Hong Lei, China’s assistant minister of foreign affairs, told a press conference. “Upholding, consolidating and developing the traditional friendship between China and the DPRK is a firm position of the Communist Party of China and the Chinese government.”DPRK refers to the Democratic People’s Republic of Korea, North Korea’s official name.North Korea’s state news agency, KCNA, said Kim will visit China at the invitation of Chinese President Xi Jinping to attend celebrations of the 80th anniversary of the war’s end. It gave no further details, including how long he will stay in China and whether he will hold an official meeting with Xi, Putin or other leaders visiting China.Others coming for the parade include the leaders of Iran, Belarus, Serbia, Cuba, Indonesia, Myanmar, Pakistan and Malaysia. No leaders from the United States or other major Western European countries are expected to attend, in part because of their differences with Putin over the war in Ukraine. The parade is expected to feature some of China’s newest weaponry and a speech by Xi.If Kim’s trip is realized, it would be his first trip to China since 2019. Since inheriting power upon his father’s death in December 2011, Kim has met Xi, Putin, U.S. President Donald Trump, former South Korean President Moon Jae-in and others, but all those summits were bilateral meetings and Kim hasn’t attended any multilateral events involving foreign leaders.In all, Kim traveled to China four times from 2018 to 2019 to meet Xi.China has long been North Korea’s biggest trading partner and main aid provider, but there have been questions about their relations in recent years. North Korea has been focusing on expanding cooperation with Russia by supplying troops and ammunition to support its war against Ukraine in exchange for economic and military assistance.But many observers say North Korea is expected to take steps to improve ties with China to revive its troubled economy, because there is a limit to what it can get from Russia and it’s also unclear if North Korea and Russia would maintain the same level of cooperation after the Ukraine war ends. In 2023, about 97% of North Korea’s external trade was with China, while 1.2% was with Russia, according to Chinese data.Kim’s visit to China could also be related to efforts to restart diplomacy with Trump, who has repeatedly highlighted his relationship with Kim and expressed his hopes to resume talks. North Korea has so far dismissed Trump’s outreach, but many analysts say North Korea would return to talks if it believes the U.S. would make greater concessions.“Pyongyang’s illicit cooperation with Moscow has strained ties with Beijing, even as China’s political and economic support remains vital for the North Korean regime,” said Leif-Eric Easley, professor of international studies at Ewha Womans University in Seoul.“To re-engage Trump from a position of strength, Kim seeks to repair relations with Xi, and attending the parade in Beijing is a highly visible way of doing that,” Easley said.During a meeting with Lee in Washington this week, Trump spoke of his past summits with Kim, including one at the Korean Demilitarized Zone. Responding to a question over whether he would return to the Demilitarized Zone, Trump told reporters, “I loved it. Remember when I walked across the line and everyone went crazy.”During Trump’s first term, he met Kim three times from 2018-19, but their high-stakes summit eventually collapsed due to wrangling over U.S.-led sanctions on North Korea. Kim has since conducted weapons tests to modernize and expand his nuclear arsenal.

    North Korean leader Kim Jong Un will make his first visit to China in six years to attend a military parade next week, the two countries said Thursday, in an event that would bring him together with a group of world leaders for the first time since taking office in late 2011.

    Kim and Russian President Vladimir Putin will be among 26 foreign leaders who attend next Wednesday’s parade in Beijing to mark the 80th anniversary of the end of World War II and China’s resistance against Japan’s wartime aggressions, according to the Chinese Foreign Ministry.

    “We warmly welcome General Secretary Kim Jong Un to China to attend the commemorative events,” Hong Lei, China’s assistant minister of foreign affairs, told a press conference. “Upholding, consolidating and developing the traditional friendship between China and the DPRK is a firm position of the Communist Party of China and the Chinese government.”

    DPRK refers to the Democratic People’s Republic of Korea, North Korea’s official name.

    North Korea’s state news agency, KCNA, said Kim will visit China at the invitation of Chinese President Xi Jinping to attend celebrations of the 80th anniversary of the war’s end. It gave no further details, including how long he will stay in China and whether he will hold an official meeting with Xi, Putin or other leaders visiting China.

    Others coming for the parade include the leaders of Iran, Belarus, Serbia, Cuba, Indonesia, Myanmar, Pakistan and Malaysia. No leaders from the United States or other major Western European countries are expected to attend, in part because of their differences with Putin over the war in Ukraine. The parade is expected to feature some of China’s newest weaponry and a speech by Xi.

    If Kim’s trip is realized, it would be his first trip to China since 2019. Since inheriting power upon his father’s death in December 2011, Kim has met Xi, Putin, U.S. President Donald Trump, former South Korean President Moon Jae-in and others, but all those summits were bilateral meetings and Kim hasn’t attended any multilateral events involving foreign leaders.

    In all, Kim traveled to China four times from 2018 to 2019 to meet Xi.

    China has long been North Korea’s biggest trading partner and main aid provider, but there have been questions about their relations in recent years. North Korea has been focusing on expanding cooperation with Russia by supplying troops and ammunition to support its war against Ukraine in exchange for economic and military assistance.

    But many observers say North Korea is expected to take steps to improve ties with China to revive its troubled economy, because there is a limit to what it can get from Russia and it’s also unclear if North Korea and Russia would maintain the same level of cooperation after the Ukraine war ends. In 2023, about 97% of North Korea’s external trade was with China, while 1.2% was with Russia, according to Chinese data.

    Kim’s visit to China could also be related to efforts to restart diplomacy with Trump, who has repeatedly highlighted his relationship with Kim and expressed his hopes to resume talks. North Korea has so far dismissed Trump’s outreach, but many analysts say North Korea would return to talks if it believes the U.S. would make greater concessions.

    “Pyongyang’s illicit cooperation with Moscow has strained ties with Beijing, even as China’s political and economic support remains vital for the North Korean regime,” said Leif-Eric Easley, professor of international studies at Ewha Womans University in Seoul.

    “To re-engage Trump from a position of strength, Kim seeks to repair relations with Xi, and attending the parade in Beijing is a highly visible way of doing that,” Easley said.

    During a meeting with Lee in Washington this week, Trump spoke of his past summits with Kim, including one at the Korean Demilitarized Zone. Responding to a question over whether he would return to the Demilitarized Zone, Trump told reporters, “I loved it. Remember when I walked across the line and everyone went crazy.”

    During Trump’s first term, he met Kim three times from 2018-19, but their high-stakes summit eventually collapsed due to wrangling over U.S.-led sanctions on North Korea. Kim has since conducted weapons tests to modernize and expand his nuclear arsenal.

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  • Shanghai relaxes home-buying rules as China’s property market struggles

    Shanghai, the commercial and financial hub of mainland China, has further relaxed its home purchase policy, following Beijing’s lead to rejuvenate the nation’s sluggish property market.

    Local residents could now own an unlimited number of flats outside the city’s outer ring road, an area where two-thirds of Shanghai’s housing is located, municipality authorities said on Monday. Previously, families were restricted to a maximum of two housing units in Shanghai.

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    The mortgage rate for buyers of a second home will be reduced to an annualised 3.05 per cent, down from 3.35 per cent, aligning it with the rate for first-home purchasers.

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    The policy adjustment aims to address residents’ pent-up housing needs and improve living conditions, while promoting stable and healthy growth in the local real estate market, according to a statement from the Shanghai government.

    Shanghai’s market-boosting measures come after new home prices across 70 mainland cities decreased 3.4 per cent last month from a year earlier, according to the National Bureau of Statistics. Home prices nationwide have been falling since April 2022.

    In the pre-owned home market, prices have been falling for more than two years, with July seeing a 5.9 per cent year-on-year drop, following a 6.1 per cent decline in June.

    Shanghai is the financial hub of mainland China. Photo: Xinhua alt=Shanghai is the financial hub of mainland China. Photo: Xinhua>

    Shanghai’s incentives were “in line with expectations”, said Zhu Xinhai, a sales manager at 5i5j Real Estate Brokerage, which is based in the city. However, the local policies “may not be sufficient to ignite strong buying interest because of prevailing pessimism regarding the economy and wage growth”, he said.

    On August 8, the Beijing municipal government initiated a relaxation of housing policies to stimulate homebuying, a surprise move intended to bolster the struggling property sector. Both local and non-local residents can now freely buy new and second-hand homes outside the Fifth Ring Road, a major highway encircling the suburbs.

    The property sector, along with related industries such as home appliances and construction materials, contributes about a quarter of China’s economic output.

    The real estate market, which had experienced three decades of rapid growth, began to decline in late 2020 when Beijing implemented austerity measures to curb excessive leverage among developers and prevent a financial shock to the economy.

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  • Nvidia’s CEO says it’s in talks with Trump administration on a new chip for China

    BANGKOK (AP) — Nvidia CEO Jensen Huang said Friday that the company is discussing a potential new computer chip designed for China with the Trump administration.

    Huang was asked about a possible “B30A” semiconductor for artificial intelligence data centers for China while on a visit to Taiwan, where he was meeting Nvidia’s key manufacturing partner, Taiwan Semiconductor Manufacturing Corp., the world’s largest chip maker.

    “I’m offering a new product to China for … AI data centers, the follow-on to H20,” Huang said. But he added that “That’s not our decision to make. It’s up to, of course, the United States government. And we’re in dialogue with them, but it’s too soon to know.”

    Such chips are graphics processing units, or GPUs, a type of device used to build and update a range of AI systems. But they are less powerful than Nvidia’s top semiconductors today, which cannot be sold to China due to U.S. national security restrictions.

    The B30A, based on California-based Nvidia’s specialized Blackwell technology, is reported to operate at about half the speed of Nvidia’s main B300 chips.

    Huang praised the the Trump administration for recently approving sales of Nvidia’s H20 chips to China after such business was suspended in April, with the proviso that the company must pay a 15% tax to the U.S. government on those sales. Chip maker Advanced Micro Devices, or AMD, was told to pay the same tax on its sales of its MI380 chips to China.

    As part of broader trade talks, Beijing and Washington recently agreed to pull back some non-tariff restrictions. China approved more permits for rare earth magnets to be exported to the U.S., while Washington lifted curbs on chip design software and jet engines. After lobbying by Huang, it also allowed sales of the H20 chips to go through.

    Huang did not comment directly on the tax when asked but said Nvidia appreciated being able to sell H20s to China.

    He said such sales pose no security risk for the United States. Nvidia is also speaking with Beijing to reassure Chinese authorities that those chips do not pose a “backdoor” security risk, Huang said.

    “We have made very clear and put to rest that H20 has no security backdoors. There are no such things. There never has. And so hopefully the response that we’ve given to the Chinese government will be sufficient,” he said.

    The Cyberspace Administration of China, the country’s internet watchdog, recently posted a notice on its website referring to alleged “serious security issues” with Nvidia’s computer chips.

    It said U.S. experts on AI had said such chips have “mature tracking and location and remote shutdown technologies” and Nvidia had been asked to explain any such risks and provide documentation about the issue.

    Huang said Nvidia was surprised by the accusation and was discussing the issue with Beijing.

    “As you know, they requested and urged us to secure licenses for the H20s for some time. And I’ve worked quite hard to help them secure the licenses. And so hopefully this will be resolved,” Huang said.

    Unconfirmed reports said Chinese authorities were also unhappy over comments by U.S. Commerce Secretary Howard Lutnick suggesting the U.S. was only selling outdated chips to China.

    Speaking on CNBC, Lutnick said the U.S. strategy was to keep China reliant on American chip technology.

    “We don’t sell them our best stuff,” he said. “Not our second best stuff. Not even our third best, but I think fourth best is where we’ve come out that we’re cool,” he said.

    China’s ruling Communist Party has made self-reliance in advanced technology a strategic priority, though it still relies on foreign semiconductor knowhow for much of what it produces.

    ___

    AP Videojournalist Taijing Wu in Taipei contributed to this report.

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  • US and China extend trade truce another 90 days, easing tension between world’s largest economies

    WASHINGTON (AP) — President Donald Trump extended a trade truce with China for another 90 days Monday, at least delaying once again a dangerous showdown between the world’s two biggest economies.

    Trump posted on his Truth Social platform that he signed the executive order for the extension, and that “all other elements of the Agreement will remain the same.” Beijing at the same time also announced the extension of the tariff pause, according to the Ministry of Commerce.

    The previous deadline was set to expire at 12:01 a.m. Tuesday. Had that happened the U.S. could have ratcheted up taxes on Chinese imports from an already high 30%, and Beijing could have responded by raising retaliatory levies on U.S. exports to China.

    The pause buys time for the two countries to work out some of their differences, perhaps clearing the way for a summit later this year between Trump and Chinese President Xi Jinping, and it has been welcomed by the U.S. companies doing business with China.

    Sean Stein, president of the U.S.-China Business Council, said the extension is “critical” to give the two governments time to negotiate a trade agreement that U.S. businesses hope would improve their market access in China and provide the certainty needed for companies to make medium- and long-term plans.

    “Securing an agreement on fentanyl that leads to a reduction in U.S. tariffs and a rollback of China’s retaliatory measures is acutely needed to restart U.S. agriculture and energy exports,” Stein said.

    China said Tuesday it would extend relief to American companies who were placed on an export control list and an unreliable entities list. After Trump initially announced tariffs in April, China restricted exports of dual-use goods to some American companies, while banning others from trading or investing in China. The Ministry of Commerce said it would stop those restrictions for some companies, while giving others another 90-day extension.

    Reaching a pact with China remains unfinished business for Trump, who has already upended the global trading system by slapping double-digit taxes – tariffs – on almost every country on earth.

    The European Union, Japan and other trading partners agreed to lopsided trade deals with Trump, accepting once unthinkably U.S. high tariffs (15% on Japanese and EU imports, for instance) to ward off something worse.

    Trump’s trade policies have turned the United States from one of the most open economies in the world into a protectionist fortress. The average U.S. tariff has gone from around 2.5% at the start of the year to 18.6%, highest since 1933, according to the Budget Lab at Yale University.

    But China tested the limits of a U.S. trade policy built around using tariffs as a cudgel to beat concessions out of trading partners. Beijing had a cudgel of its own: cutting off or slowing access to its rare earths minerals and magnets – used in everything from electric vehicles to jet engines.

    In June, the two countries reached an agreement to ease tensions. The United States said it would pull back export restrictions on computer chip technology and ethane, a feedstock in petrochemical production. And China agreed to make it easier for U.S. firms to get access to rare earths.

    “The U.S. has realized it does not have the upper hand,’’ said Claire Reade, senior counsel at Arnold & Porter and former assistant U.S. trade representative for China affairs.

    In May, the U.S. and China had averted an economic catastrophe by reducing massive tariffs they’d slapped on each other’s products, which had reached as high as 145% against China and 125% against the U.S.

    Those triple-digit tariffs threatened to effectively end trade between the United States and China and caused a frightening sell-off in financial markets. In a May meeting in Geneva they agreed to back off and keep talking: America’s tariffs went back down to a still-high 30% and China’s to 10%.

    Having demonstrated their ability to hurt each other, they’ve been talking ever since.

    “By overestimating the ability of steep tariffs to induce economic concessions from China, the Trump administration has not only underscored the limits of unilateral U.S. leverage, but also given Beijing grounds for believing that it can indefinitely enjoy the upper hand in subsequent talks with Washington by threatening to curtail rare earth exports,’’ said Ali Wyne, a specialist in U.S.-China relations at the International Crisis Group. “The administration’s desire for a trade détente stems from the self-inflicted consequences of its earlier hubris.”

    It’s unclear whether Washington and Beijing can reach a grand bargain over America’s biggest grievances. Among these are lax Chinese protection of intellectual property rights and Beijing’s subsidies and other industrial policies that, the Americans say, give Chinese firms an unfair advantage in world markets and have contributed to a massive U.S. trade deficit with China of $262 billion last year.

    Reade doesn’t expect much beyond limited agreements such as the Chinese saying they will buy more American soybeans and promising to do more to stop the flow of chemicals used to make fentanyl and to allow the continued flow of rare-earth magnets.

    But the tougher issues will likely linger, and “the trade war will continue grinding ahead for years into the future,’’ said Jeff Moon, a former U.S. diplomat and trade official who now runs the China Moon Strategies consultancy.

    ___

    Associated Press Staff Writers Josh Boak and Huizhong Wu contributed to this story.

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  • CNBC Daily Open: With an unchanged PPI, the Fed’s near the finish line

    CNBC Daily Open: With an unchanged PPI, the Fed’s near the finish line

    A television station broadcasts the Federal Reserve’s interest-rate cut on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Sept. 18, 2024.

    Michael Nagle | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Winning week for markets
    All
    major U.S. indexes rose Friday on the back of encouraging inflation data and positive earnings from big banks. That gave them a winning week. Asia-Pacific markets mostly traded higher Monday. China’s Shanghai Composite rose around 2% in choppy trading. Over the weekend, Beijing reported a lower-than-expected consumer inflation rate and producer prices falling for September.

    Tesla’s Cybercab and Robovan
    Tesla shares slumped 8.8% after the company’s “We, Robot” event disappointed investors. At the Thursday night event, CEO Elon Musk unveiled the Cybercab, a two-seater with no steering wheels or pedals, and the Robovan, an autonomous vehicle that has a big capacity. But Musk offered little other details, causing analysts to cast doubt on the company.

    More assurances from China
    In a press briefing held Saturday, Chinese Minister of Finance Lan Fo’an told reporters the space for Beijing to increase its budget deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of the Chinese. Lan also announced measures to support employment and the real estate industry.

    Banks’ earnings in good shape
    JPMorgan Chase, the biggest bank in the U.S., reported third-quarter earnings and revenue that beat estimates. Net interest income grew 3% from a year ago and helped revenue to increase 6%. Wells Fargo had a decent third quarter. The bank beat estimates for earnings, but unlike JPMorgan, revenue was below expectations and NII decreased.

    [PRO] Earnings will show market direction
    After the deluge of data such as September’s jobs reports and consumer price index report, earnings will determine the path of markets for the near term. Big banks dominate third-quarter reports this week. It’s Bank of America and Goldman Sachs’ turn on Tuesday, while Morgan Stanley announces its earnings on Wednesday.

    The bottom line

    It seems like September’s hotter-than-expected inflation reading was indeed a blip.

    With a snap of its fingers, the producer price index assuaged worries over inflation remaining stubborn. The index, which measures wholesale prices – and thus generally prefigures changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% increase.

    In fact, last week’s inflation figures looked so promising that Goldman Sachs think the Federal Reserve has just about brought inflation down to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.

    While consumer sentiment dipped slightly in October, according to the University of Michigan’s Survey of Consumers, “long run business conditions lifted to its highest reading in six months,” wrote Joanne Hsu, the survey’s director.

    JPMorgan Chase’s third-quarter earnings may be the first taste of that. The biggest bank in America beat estimates on both revenue and earnings. As banks generally reflect the health of the broader economy, it’s a signal things aren’t all bad despite dipping consumer confidence.

    Admittedly, earnings reflect what has already happened. Investors care more about what’s going to happen. But consumers are “fine and on strong footing,” as JPMorgan’s CFO Jeremy Barnum told reporters.

    Markets cheered the string of positive news.

    On Friday, the S&P 500 added 0.61%, the Dow Jones Industrial Average rose 0.97% and the Nasdaq Composite was up 0.33%.

    That capped off a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq climbed 1.1%, while the Dow did a bit better with its 1.2% increase for the week.

    “What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.

    It’s a reminder that subduing inflation is just a stop toward investors’ real endgame of a healthy stock market.

    – CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.   

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  • CNBC Daily Open: Fedspeak reassures markets

    CNBC Daily Open: Fedspeak reassures markets

    Neel Kashkari, President and CEO, Federal Reserve Bank of Minneapolis, speaks at the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, U.S., May 7, 2024. 

    David Swanson | Reuters

    This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Markets regain momentum
    U.S. markets
    rose Monday, with the S&P 500 and Dow Jones Industrial Average notching fresh closing highs. Asia-Pacific stocks mostly climbed Tuesday, with the Chinese and Hong Kong markets popping over 3% on Beijing’s announcement of policy easing measures.

    PBOC policy easing
    The People’s Bank of China Governor Pan Gongsheng on Tuesday announced a cut to banks’ reserve requirement ratio. That means banks won’t need as much cash on hand, which injects liquidity into the economy. The yields on Chinese bonds, in turn, dropped to record lows after the PBOC’s announcement.

    New property stimulus in China
    At the same press conference, the PBOC governor also said Beijing will reduce interest rates on existing individual mortgages by an average of half a percentage point, and lower the down-payment ratio for second home purchases to 15% from 25%. Hong Kong-listed shares of property companies surged in response to the stimulus.

    Revised offer for Boeing workers
    Amid a strike by Boeing workers, the company revised its contract offer, raising wages by 30% over four years, up from 25% it proposed earlier. Boeing reinstated annual bonuses and doubled a contract ratification bonus to $6,000 from $3,000. The labor union said Monday it is reviewing the offer.

    [PRO] Tech for Big Tech
    The rising tide of artificial intelligence is lifting related stocks. Specialized chips, data centers and electricity are needed to power the AI boom. Companies in those sectors have seen their stocks rise. The next to benefit from AI, according to Japanese bank Nomura, is the industry specializing in cooling of data centers.

    The bottom line

    We were treated to abundant Fedspeak on Monday.

    In an interview with CNBC, Minneapolis Fed President Neel Kashkari said, “We still have a strong, healthy labor market. But I want to keep it a strong, healthy labor market.” Kashkari’s emphasis on the strength of the jobs market suggests the Fed wants to reinforce the narrative that the economy’s not staring at a recession.

    Atlanta Fed President Raphael Bostic was more circumspect. “Progress on inflation and the cooling of the labor market have emerged much more quickly than I imagined at the beginning of the summer,” he said at a separate event.

    That Bostic was possibly surprised by the increase in the unemployment rate is an indication some Fed officials are indeed worried the jobs market isn’t as strong as it should be.

    Last, in remarks to the National Association of State Treasurers, Chicago Fed President Austan Goolsbee said that “it’s appropriate to increase our focus on the other side of the Fed’s mandate — to think about risks to employment, too, not just inflation.”  

    Goolsbee sees “many more rate cuts over the next year” because the state of employment is a “through line on economic conditions.” That suggests economic conditions need the support of additional cuts.

    Still, yesterday’s Fedspeak was sufficiently vague and didn’t seem to cause alarm.

    Major U.S. indexes ticked up. The S&P rose 0.28%, the Dow advanced 0.15% and the Nasdaq Composite climbed 0.14%. While those increases appear small, they pushed the S&P and Dow to new closing highs.

    The narrative the central bank has been on top of its game to ensure a soft landing, then, is very much intact.

    – CNBC’s Jeff Cox, Brian Evans and Alex Harring contributed to this story. 

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