US Says First Day Of China Trade Talks "Very Constructive"
Amid mounting trade war tensions which saw the market suffer its biggest drop since April two weeks ago following a post on Trump's Truth Social in which he threatened a fresh surge in Chinese tariffs over its retaliation with rare earth minerals, the latest round of talks between the two superpowers in Malaysia started off on the right foot after the US said it held “very constructive” discussions with China as President Donald Trump began his trip to the region including a meeting with the Chinese leader next week.
As Bloomberg reports, Chinese and American officials met in Kuala Lumpur on Saturday for a new round of talks aimed at defusing a standoff between the world’s two largest economies. A spokesperson for the US Treasury gave a brief description of the exchange and said it will resume Sunday.
The Chinese delegation made no public remarks after the 5.5-hour-long meeting at Merdeka 118, the world’s second-tallest building. Vice Premier He Lifeng led the Chinese side and was joined by Trade Representative Li Chenggang and Vice Finance Minister Liao Min. US Treasury Secretary Scott Bessent headed the US team.
As a reminder, two weeks ago, when the trade relations between the two countries suddenly collapsed, Bessent lashed out at Chenggang calling him “unhinged”, as he announced the US is planning “price floors” and “forward buying” to prevent future supply chain disruptions by Beijing’s export controls. Bessent made the remarks five days after President Trump threatened an additional 100% tariff on Chinese goods in response to Beijing’s rules requiring companies to seek permission to export products made with rare-earth or critical minerals, reducing the flow of batteries, magnets and semiconductors to the US.
Bessent revealed more of the backstory behind China’s surprise rule changes announced Oct. 9, claiming that the bellicose Li Chenggang “showed up uninvited” in DC on Aug. 28 and threatened that “China would unleash chaos on the global system” if the US didn’t abandon docking fees for Chinese ships.
“There was a lower level trade person who was slightly unhinged here in August … threatening, saying China would unleash chaos on the global system if the US went ahead with our docking fees on Chinese ships, and this is something they clearly were planning all along,” Bessent said during CNBC’s “Invest in America” forum.
We expect many questions why China decided to deploy Chenggang again, knowing well it would antagonize the US Treasury Secretary, unless of course that was its intention.
Bessent and He, a longtime associate of Xi, face the task of negotiating down new escalatory measures imposed by their countries against one another. They are also setting the stage for expected talks on Thursday between Xi and US President Donald Trump on the sidelines of the Asia-Pacific Economic Cooperation leaders’ summit in South Korea.
Ahead of the meeting, Trump told reporters aboard Air Force One that he and Xi have “a lot of things to discuss” and expects both sides to make compromises, although he won’t put odds on getting a deal.
“They have to make concessions. I guess we would too. We’re at 157% tariff for them. I don’t think that’s sustainable for them, and they want to get that down, and we want certain things from them," Trump said Friday on his way to Asia.
Asked what odds he would put on imposing the additional 100% levies on China, Trump said: “I don’t know. I have no odds. I don’t think they would want that. It would not be good for them. I wouldn’t like to see it.”
The US president will meet with Malaysia’s Prime Minister Anwar Ibrahim on Sunday to discuss trade, investment and security. Bloomberg News previously reported he looks to sign economic agreements and critical minerals deals with trading partners during the trip, the first to the region during his second term.
Ahead of his meeting with Xi, Trump said he wants to extend a pause on higher tariffs on Chinese goods in exchange for Beijing resuming American soybean purchases, cracking down on fentanyl and backing off restrictions on rare-earth exports. Earlier in October, Trump lashed out against Beijing’s vow to broaden controls on rare-earth elements, raising the prospect of setting a sky-high tariff rate on Chinese goods and even canceling his first in-person meeting with Xi since he returned to the White House this year. His comments sparked a painful if short selloff.
At stake is a trade truce that’s set to run out on Nov. 10 unless extended. Months of tentative stability in the US-China relationship have been upended in recent weeks after Washington broadened some tech restrictions and proposed levies on Chinese ships entering US ports.
China responded with parallel moves and outlined tighter export controls on rare earths and other critical materials. On Monday, the Ministry of Commerce convened an unusually large meeting in Beijing with foreign businesses, in an effort to reassure them that its latest export controls aren’t meant to restrict normal trade.
The global ripples of China’s export controls underscore how the trade war has injected uncertainty into the world economy and trade. Chinese shipments to Southeast Asia and the European Union have jumped this year as US tariffs soared, which may pressure local manufacturers.
After meeting south-east Asian leaders in Malaysia on Sunday, Trump will fly to Japan to meet Sanae Takaichi, Japan’s new prime minister.
In a post on X on Saturday, Takaichi said that she had held a “good and candid” with Trump. Takaichi, who became prime minister this week, added that she would seek to strengthen Japan’s alliance with the US.
Had a good and candid conversation with @realDonaldTrump today and truly appreciated his warm congratulatory message on my appointment as Prime Minister. Together with him, I am determined to elevate the Japan–U.S. Alliance to even greater heights.
Starting tomorrow, I’ll be…
— 高市早苗 (@takaichi_sanae) October 25, 2025
On Friday, she announced plans to increase Tokyo’s defence spending, in a move that analysts said would give her scope to pledge further expansion of the military budget during Trump’s visit.
Speaking at the Mount Fuji Dialogue forum in Tokyo on Saturday, US ambassador to Japan George Glass said Trump was visiting Japan “at a time of rising tensions in the region”.
“This is a very tough neighbourhood,” Glass said. “The US-Japan alliance and our partners face determined and dangerous adversaries, adversaries that will do whatever it takes to undermine our alliance and weaken our regional partnerships.”
Tyler Durden
Sat, 10/25/2025 – 14:35