US Delegation Heading to Malaysia for China Trade Talks

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U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are heading to Malaysia for a fifth round of in-person trade talks with their Chinese counterparts amid heightened tensions between the two countries.

Greer confirmed the trip in a CNBC “Squawk Box” interview on Oct. 22, where he reiterated that the Chinese regime had disproportionately escalated tensions globally and that it was Beijing’s responsibility to de-escalate.

“It was incredibly aggressive; it was totally disproportional to anything that the U.S., the EU, or Canada or anybody did,” Greer said, referencing the sweeping rare earths export controls Beijing issued earlier this month.

The European Union has similarly called on Beijing to roll back the restrictions, which would apply to goods containing more than 0.1 percent of 12 rare earths mined or processed in China and are expected to be disruptive to several industries.

“Remember, these are global measures that the Chinese have put in place to purport to control the movement or export of any item containing certain rare earths from one country to another, right, even if China is not one of the parties in the agreement,” Greer said.

The parties previously met four times, in Geneva—where a pause on April trade measures was agreed upon by both sides—London, Stockholm, and Madrid.

Greer rejected Beijing’s narrative that this was a tit-for-tat measure or that other parties, including the United States, had escalated tensions by recapping the timeline of trade negotiations.

In May, Washington agreed to pause its tariffs on China, and Beijing agreed to similarly pause high tariffs and roll back rare earth export controls, which, at the time, covered five minerals. The Chinese did not roll back the controls immediately, as they had agreed to do, but instead slow-walked the measure for months.

“We kept that promise, and they have not kept theirs,” Greer noted.

Despite that, he said, ongoing talks were “very cordial and constructive discussions” over the summer.

Most recently, the United States fine-tuned export controls on semiconductors to close a loophole, and both countries set port fees that affected the other. The United States aimed to curb the trade of Iranian oil, while Beijing responded with retaliatory measures.

“And then again, a couple of weeks ago, the Chinese decided they were just going to go ahead and expand those controls on rare earths, again, not on just us, but on the whole world,” Greer said.

He echoed several other officials, policymakers, and China observers in noting that Beijing’s latest rare earths restriction is not in any way similar to U.S. export controls. Whereas the United States targets specific items and companies, the Chinese regime’s latest move would require companies that trade any goods containing trace amounts of the relevant rare earths to seek Beijing’s permission.

Various U.S. agencies have different, periodically updated lists of critical minerals, with about 17 generally appearing on all lists. Beijing’s restrictions apply to 12. The restrictions also cover any materials mined or processed in China, and the United States estimates that at least 90 percent of all rare earth processing happens in China.

Greer has previously pointed out that the scale of administrative work required to properly license this volume of trade is beyond China’s capacity, given how slowly applications were processed after the April restrictions.

U.S. President Donald Trump, who is also heading to Malaysia to oversee the signing of a Thailand–Cambodia peace deal on the first day of the Association of Southeast Asian Nations summit on Oct. 26, has expressed optimism that China will come to the table with reasonable measures.

He and other trade officials have emphasized that China cannot bear the burden of 100 percent or higher tariffs, signaling that Beijing should not expect a repeat of the April events.

When China issued its first rare earths restrictions in response to high U.S. tariffs, the stock market swung wildly, and the parties soon met at the negotiating table. This time, Trump previewed an additional 100 percent tariffs and U.S. export restrictions in response. Those measures would go into effect a day or two after his possible meeting with Chinese leader Xi Jinping if Beijing continues to “play the rare earth game,” Trump told reporters earlier this week.

Greer said: “Notionally, there is a good landing zone for the United States and China, where we trade in a way that’s more balanced, and we’re trading in non-sensitive goods, and where we have a constructive relationship, and we probably have to actively manage that trading relationship.”

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