CNBC’s The China Connection e-newsletter: A delicate truce as tempers flare

This record is from this week’s CNBC’s The China Connection e-newsletter, which brings you insights and research on what is riding the sector’s second-largest economic system. Each week, we will discover the largest industry tales in China, give a lowdown on marketplace strikes and assist you to arrange for the week forward. Like what you notice? You can subscribe right here.

It follows an previous accusation via the similar ministry on Monday that blamed the U.S. for undermining business talks with a Huawei chip caution remaining week — even though the U.S. Bureau of Industry and Security had if truth be told toned down its language and pushed aside a extra restrictive Biden-era plan on chips.

Many within the U.S. also are involved that China is not stress-free uncommon earth export controls, some other space by which China dominates the provision chain. That’s regardless of the joint commentary’s obscure description of ways China would “droop or take away the non-tariff countermeasures taken in opposition to the United States since April 2, 2025.”

“I do think Washington was expecting the export controls on that group of rare earths to be lowered, permitting exports in a relatively unrestricted way,” stated Scott Kennedy, senior adviser and trustee chair in Chinese Business and Economics on the Center for Strategic and International Studies in Washington, D.C.

“If it turns out that, in fact, that is not the result, the U.S. will probably conclude that China is in violation of the agreement,” he stated. “We could see a re-escalation sooner rather than later.”

While the White House has but to reply to a CNBC request for remark, a step again unearths ambiguity on China’s facet.

But are the uncommon earth export controls a part of China’s countermeasures to U.S. price lists? That’s up for debate. An April 4 file from China’s trade ministry and customs company pronouncing the export controls didn’t explicitly label them as such.

While China did pause restrictions on 28 U.S. entities that had been slapped with export controls on important minerals, the ministry has made a number of public statements about strengthening export controls on important minerals.

“Given the comprehensive and competitive nature of bilateral relations, the current truce — while focused on trade—can easily be undermined by export controls,” stated Yue Su main economist, China, at The Economist Intelligence Unit.

“While rhetorical posturing is unlikely to undermine the 90-day truce, China may well recalibrate its export control regime in a measured response to U.S. actions,” she stated.

The Chinese trade ministry on Sunday additionally introduced tasks of as much as 74.9% on imports of an engineering plastic from the U.S., Europe, Japan and Taiwan.

U.S. President Donald Trump remaining week advised Fox News he’s open to a choice with Chinese President Xi Jinping, or even a shuttle to China. But Beijing hasn’t dropped any hints.

“I’d be surprised if the two step into the middle of these issues right now with so much unclear,” Kennedy stated.

The new U.S. Ambassador to China, David Perdue, arrived in Beijing on Thursday, moderately greater than two weeks after being showed via the Senate. He used to be prior to now the pinnacle of Asia for U.S. packaged shopper items corporate Sara Lee.

One of Perdue’s first social media posts referred to as for “strong actions” on fentanyl. He stated on X that, along side U.S. Trade Representative Jamieson Greer, they had been “meaningfully engaged with the Chinese on next steps to stop this dangerous situation.”

The U.S. has left in position 20% in price lists imposed previous this yr over China’s alleged function within the fentanyl disaster.

The joint commentary remaining week stated the U.S. and China would determine a mechanism for talks about financial and business members of the family, however neither facet has specified when the following one would happen.

Liu, who helped creator a record in February with The Carter Center about bilateral cooperation, emphasised the whole center of attention of the present talks is business moderately than tech. He expects that China may sooner or later agree to shop for extra U.S. agriculture and effort merchandise — given the belief that pressuring farmers can affect Trump.

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Mainland China’s CSI 300 used to be up 0.68% whilst Hong Kong’s Hang Seng Index — which contains main Chinese firms — rose 0.53% as of 12 p.m. native time.

The benchmark 10-year Chinese govt bond yield is at 1.669%.