IRIA News

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The United States and China began high-level economic and trade consultations in the Malaysian capital on October 25, 2025, to prepare the ground for a meeting between U.S. President Donald Trump and Chinese President Xi Jinping next week in South Korea.

The Chinese delegation, led by Vice Premier He Lifeng, and the U.S. team, headed by Treasury Secretary Scott Bessent, consulted “on important issues in China–U.S. economic and trade relations,” according to a statement released by China’s Ministry of Commerce. The ministry said the discussions follow the “important consensus reached during multiple phone calls between the two heads of state this year.”

The meeting marks the fifth round of talks between the two sides, following earlier sessions in Geneva, London, Stockholm, and Madrid. This round coincides with the Association of Southeast Asian Nations (ASEAN) summit, which is being held in Kuala Lumpur from Sunday to Tuesday.

The Malaysian government and both delegations have released a few details about the Kuala Lumpur discussions, and no press briefing was held. The Chinese side, meanwhile, has emphasized that the dialogue reflects a shared commitment to maintaining communication and managing differences responsibly.

Strategic Mineral Supply Chains

Beyond tariffs, the U.S. is also expected to push for agreements on critical minerals during Trump’s Asia trip, as Washington works to reduce dependence on Chinese supplies vital to industries such as electric vehicles, semiconductors, and defense technologies.

According to Treasury officials, discussions in Malaysia will include a framework for securing critical mineral supply chains, in line with Washington’s broader de-risking strategy.

“The new U.S.–Australia framework is a cornerstone of this effort, launching an $8.5 billion project pipeline,” said Tong. “Similar deals could emerge as the U.S. seeks to build alternative supply networks and strengthen its industrial base.”

Avoiding Escalation

The talks come amid rising tensions after both countries imposed new trade restrictions in recent months. Earlier this month, the U.S. announced an additional 100 percent tariff on Chinese goods, set to take effect on November 1, in retaliation for China’s expanded export controls on rare earth magnets and critical minerals. China introduced the measures in October, citing national security concerns and the need to prevent their use in military systems.

The move disrupted a fragile tariff truce that had been in place since May, when both countries agreed to lower duties to around 55 percent on the U.S. side and 30 percent on the Chinese side.

That deal, brokered by Bessent and U.S. Trade Representative Jamieson Greer, was extended twice before fraying at the end of September after Washington widened its export blacklist to thousands more Chinese firms.

China’s response, sweeping controls on rare earth exports, drew strong criticism from Washington, which described the move as a “global supply chain power grab.”

Preparing for the Trump–Xi summit

The latest meeting in Kuala Lumpur is seen as crucial in setting the stage for the anticipated Trump–Xi meeting at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea next week. Officials say the leaders are expected to discuss potential interim relief on tariffs, technology export controls, and Chinese purchases of U.S. agricultural products, including soybeans.

President Trump, who departed Washington on Friday night for a five-day trip to Malaysia, Japan, and South Korea, told reporters aboard Air Force One that the talks would cover a wide range of issues, including Taiwan, trade, and the case of jailed Hong Kong media tycoon Jimmy Lai.

“We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump said before departing.

He added that while Taiwan would be among the topics discussed, he has “no plans” to visit the island. Trump also indicated that he hopes to seek China’s assistance in Washington’s dealings with Russia.

Global Markets Watching Closely

Markets have reacted cautiously to the renewed negotiations, with investors monitoring developments closely. Dat Tong, senior financial markets strategist at Exness, said the talks could have “a strong impact on economic and trade expectations as well as on financial markets.”

“The discussion could lead to a temporary pause on new tariffs in exchange for a pathway to renewed Chinese purchases of U.S. agricultural goods,” he said. “However, any truce would be fragile and tactical. If the talks fail, tensions could escalate rapidly, with the U.S. likely proceeding with tariff hikes and China fully enforcing its new export restrictions.”

While both nations appear intent on preventing a return to all-out trade confrontation, the path forward remains uncertain. Analysts caution that even if temporary relief is achieved, the deeper structural issues, particularly over technology access and strategic resource control, will continue to test the limits of U.S.–China cooperation.