US - Chinese officials meet in KL to prevent trade escalation ahead of Trump-Xi summit

SENIOR economic officials from the United States and China are meeting in Kuala Lumpur on the sidelines of the ASEAN Summit in a bid to avert a renewed escalation of their trade war and to pave the way for a high-stakes meeting next week between President Donald Trump and President Xi Jinping.

The talks come after Trump threatened new 100 per cent tariffs on Chinese goods and additional trade curbs from 1 November, in response to China’s expanded export controls on rare earth magnets and minerals.

The escalation follows the U.S. Commerce Department’s enlargement of an export blacklist covering thousands more Chinese firms, which disrupted a delicate trade truce established over four prior meetings since May.

“The meeting can’t happen without an agreement that they can return to this intermediate ceasefire that we’ve had over the summer,” said Josh Lipsky, international economics chair at the Atlantic Council.

“The U.S. wants to reverse and end China’s new rare earths controls. I’m not sure the Chinese can agree to that. It’s the primary leverage that they have.”

The Kuala Lumpur negotiations aim to mitigate disputes over rare earths and U.S. technology export curbs, creating conditions for Trump and Xi to meet next Thursday at the Asia-Pacific Economic Cooperation summit in South Korea.

Potential discussions at the summit could include interim relief on tariffs, technology restrictions, and Chinese purchases of U.S. soybeans.

“If they make a deal, their gambit will have paid off. If there’s no deal, then everyone will need to prepare for things to get much nastier,” said Scott Kennedy, China economics expert at the Center for Strategic and International Studies.

The rare earths dispute underlines the strategic tension between the world’s two largest economies.

China’s new controls, introduced on 10 October, require export licences for products using Chinese rare earths or related technology, citing national security concerns.

U.S. officials condemned the move as a “global supply chain power grab” and are considering further restrictions on a wide range of software-driven exports to China.

The outcome of the Kuala Lumpur talks will set the tone for the Trump-Xi summit and determine whether the fragile trade truce can be maintained or whether a renewed escalation in tariffs and economic measures looms. - October 25, 2025