Beijing and Washington Formalize Trade Framework, Focus on Export Controls
China has officially confirmed further details of a trade framework agreement with the United States. This announcement from Beijing echoes earlier statements by US officials, signaling a significant step towards stabilizing economic ties between the two global powers amidst ongoing competition.
According to a statement released by China’s Ministry of Commerce on Friday, officials from both nations have maintained close contact following high-level trade talks held in London earlier this month. These discussions built upon prior negotiations and laid the groundwork for the recently confirmed agreement.
Key Components of the Deal
The finalized framework outlines reciprocal commitments from both sides. China has stated it will review and approve export applications for controlled items in line with its domestic laws and regulations. In return, the United States has agreed to lift a series of restrictive measures previously imposed against China.
A particular focus of the agreement is reportedly on export controls, specifically addressing materials critical to high-tech industries.
Spotlight on Rare Earths
A key element confirmed within the framework involves the export of rare earth elements. These minerals are vital components in numerous advanced products, including electric vehicles, computer hard drives, robots, national defense equipment, and wind turbines. China holds a dominant position in the global production and supply chain of these materials.
Securing a reliable supply of rare earths has been a priority for the US in trade discussions. China had previously implemented requirements for export licenses for seven rare earth elements in April, a move interpreted by many as a response to earlier US tariffs. The agreement involves China accelerating the review and approval process for rare earth export license applications that meet legal requirements, with confirmation that a certain number of compliant applications have already been approved. This issue reportedly took precedence over broader tariff discussions in recent negotiations.
Path to Agreement
The confirmation from Beijing followed comments made by US President Donald Trump on Thursday, who stated the US had signed a trade deal with China the previous day, though he initially provided few specifics, noting the deal would help “open up China.” US Commerce Secretary Howard Lutnick also confirmed the agreement, stating it was “signed and sealed” two days prior and highlighting President Trump’s personal involvement in closing deals.
This agreement formalizes a framework that began taking shape during initial trade talks in Geneva in early May. Those earlier discussions led both countries to postpone planned significant tariff increases that threatened bilateral trade. Subsequent talks in London further developed this framework, culminating in the confirmed details aimed at implementing the consensus reached in Geneva. A White House official noted this represented an “additional understanding for a framework to implement the Geneva agreement.”
Economic Context and Outlook
The agreement comes after a period of heightened trade tensions that have impacted both economies. The uncertainty contributed to a 0.5% annual contraction in the US economy during the first quarter of the year, partly linked to increased imports ahead of potential tariffs. China’s factory profits also saw significant declines.
While the confirmed framework signals progress and a mutual easing of certain restrictions, some higher US tariffs, including those related to fentanyl trade and duties on aluminum and steel, reportedly remain in place.
Looking ahead, US officials have indicated intentions to pursue additional trade deals with other countries, including India. The finalized framework between the US and China is seen as a much-needed step towards stabilizing trade relations and establishing a structured process for addressing key areas of contention, particularly around critical exports like rare earths.