The highly anticipated Sino-U.S. London talks have finally yielded significant news! According to the latest reports, the two sides reached an agreement in principle on the framework of a new trade agreement during the two-day talks held in London. This undoubtedly injects a shot in the arm into the global economy and gives hope to those who were previously pessimistic about the prospects of the negotiations.
So, what exactly was discussed in this negotiation? And what are the key points worth noting?
Core Content of the Negotiation: Tariffs, Chips, Rare Earth, Market Access
It is understood that the trade agreement framework reached by the two sides covers several key areas:
- Tariff Adjustment Mechanism: Although there were previous reports that tariffs might not be the focus of this negotiation, they were ultimately included in the discussion. This means that both sides are willing to make certain concessions and adjustments on the issue of tariffs.
- Export of Artificial Intelligence Chips and Semiconductors: This is undoubtedly one of the focuses of this negotiation. U.S. export controls on chips to China have been a significant component of Sino-U.S. trade friction.
- Supply Security of Rare Earth Mineral Resources: As an important strategic resource, the supply of rare earth has always been a concern.
- Corporate Market Access and Investment Transparency: This is mainly aimed at China and is an issue that the United States has long emphasized, namely, requiring China to further open up its market and provide a fair competitive environment for foreign companies.
These four major areas are actually implementing the consensus reached in the previous phone call between the two leaders and are a further advancement of the Geneva agreement. If all goes well, the previously imposed tariffs, restrictions on rare earths, and suppression of Huawei's chips may be gradually lifted. Of course, the final agreement framework still needs to be submitted to the top leaders of the two countries for final review.
Unexpected Breakthrough: Substantive Progress Exceeds Expectations
It is worth noting that the progress made in this negotiation exceeded many people's expectations. Originally, it was believed that the main purpose of this negotiation was to solve the new problems that arose after the Geneva meeting and bring the situation back to the starting point of Geneva. But the final result is that the two sides not only solved these new problems but also reached a new trade framework, which is undoubtedly a substantial breakthrough.
According to the plans of both parties, the preparation of the final agreement text is expected to be completed by mid-July. This speed is also much faster than previously expected.
The Game Behind the Negotiation: Water-for-Water Model and Limited Opening
The negotiation was not smooth sailing. It is said that the first day of negotiations was very difficult, and the United States even proposed a "water-for-water" model, that is, to conditionally loosen semiconductor exports (non-top-end) in exchange for China accelerating the supply of rare earths. However, top-level AI chips such as Nvidia are still excluded from the scope of compromise.
- High-End Chip Exports
- Rare Earth Supply
From the current situation, the United States seems to have realized that China has considerable say in the rare earth issue.
The Final Outcome: Will a "Draw" Be Reached?
So, how should we view the results of this Sino-U.S. London negotiation? And how should we look forward to the future of Sino-U.S. economic and trade relations?
Some analysts believe that the result of this negotiation is likely to be a "draw." China may open up its market to some extent, but will not fully meet the requirements of the United States. And the United States will also make concessions in some areas, but will not give up restrictions on China's high-tech fields.
| Agreement Comparison | 2019 Sino-U.S. Phase One Trade Agreement | New Phase Trade Agreement to Be Reached |
|---|---|---|
| Openness Level | Greater | Limited, Small-Scale |
After this fierce contest, the United States finally realized the importance of rare earths, and China also demonstrated its determination to safeguard its own interests. Ultimately, the two sides may reach a compromise that is acceptable to both.
Of course, the final result remains to be seen by the final review of the leaders of the two countries. But what is certain is that this London negotiation has brought new hope to Sino-U.S. economic and trade relations and injected new impetus into the stable development of the global economy.