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Trade talks between USA and China: renewed hope for peace!
US delegation will meet with China in London on June 7, 2025 for trade talks to clarify existing agreements.
Trade talks between USA and China: renewed hope for peace!
On Monday, high-ranking US and Chinese officials will meet in London for crucial trade talks. The US delegation is led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. These talks follow a phone call between US President Donald Trump and Chinese leader Xi Jinping, which led to the convening of these negotiations. The aim of the talks is to clarify the details of a trade agreement concluded in May that provides for a temporary reduction in punitive tariffs.
China reacted cautiously after the phone call and emphasized that the USA must stick to the agreements. Beijing claims to have implemented the agreement seriously and conscientiously. Trump, on the other hand, has pursued a tough trade policy towards China since the beginning of his term in office, with punitive tariffs on imports from China having now been increased to up to 145 percent. These measures led to significant counter-tariffs from Beijing.
The impact of the trade war on China
The ongoing tensions in the trade war with the USA are putting a significant strain on China, especially in the industrial sector, which is heavily dependent on exports. Markets such as Huaqiangbei in Shenzhen, one of the largest electronics markets in the world, are affected by the effects. A retailer named Ms. Chen reports a drastic decline in her sales, which have fallen to half of what they were before the coronavirus pandemic. The additional tariffs of 20 percent on all exports to the USA make access to new customers more difficult.
In addition to the challenge posed by the export-oriented sector, domestic demand and consumption in China have not been sufficiently stimulated. Many Chinese consumers prefer to save rather than consume, further complicating economic recovery. Amid these circumstances, the National People's Congress takes place with about 3,000 delegates. Premier Li Qiang will present the government's plans for the coming year. At the same time, Congress should spread confidence and promote economic stability.
China's strategies in the trade conflict
China has built massive capacity in the electric car industry, but produces more than is needed domestically. As the country hopes for a “deal” with the Trump administration to improve trade relations, it is also responding to the threatening standoff. Beijing has already introduced punitive tariffs on US agricultural products and is better prepared for the trade conflict than during Trump's first term in office. China has found alternative sources of supply for soybeans and other food products.
In addition, China controls much of the world's processing of rare earths and other strategically important metals. The Communist Party has set a target of five percent economic growth for 2025, which is an immense task even without the challenges of the trade conflict. The upcoming meeting in London could be decisive in determining whether a de-escalation in trade relations is possible.
In conclusion, the US-China trade talks on Monday are of great importance. They could pave the way for a stabilization of relations that have been severely strained in recent times. It remains to be seen whether the two sides will reach an agreement in London that can take into account both countries' economic interests and global markets.