U.S.-China gestures hint at calm — but the rivalry still runs deep

Even as the trade truce between the United States and China continues, analysts warn that détente remains fragile in a contest increasingly defined by strategic competition.

A series of decisions, set out in the comprehensive trade deal that US President Donald Trump struck with Chinese leader Xi Jinping last month, took effect on Monday, rolling back tough tariffs and export controls.

The United States cut fentanyl-related tariffs on imports from China in half to 10% and extended for a year a truce that reduced the reciprocal tariff rate from 34% to 10%.

In contrast, the Chinese Ministry of Commerce rolled back several restrictions on the export of vital minerals and rare earth materials to the United States on Monday. These restrictions, which were first imposed on October 9, targeted materials vital to military equipment, semiconductors and other high-tech industries.

Beijing too Reflected vindictive boundaries On exports of gallium, germanium, antimony, and other ultra-hard materials such as synthetic diamonds and boron nitrides. The measures, introduced in December 2024, are widely seen as a reaction to Washington’s expanded restrictions on semiconductor exports to China.

However, economists at Morgan Stanley said Beijing has not dismantled the export control framework it introduced in April – and will likely maintain a “calibrated choke point” aimed at maintaining leverage.

Given the ongoing strategic rivalry, “we view renewed negotiations, episodic flare-ups, and policy asymmetry as the new equilibrium,” the economists said.

China is also reportedly developing a so-called “verified end user” system, or VEU, to prevent exports of rare earth elements to companies with ties to the US military. The Wall Street Journal reported on Tuesdayciting unnamed sources.

This system, if strictly implemented, could make it difficult for auto and aerospace companies with civilian and defense customers to import some Chinese materials, the newspaper reported.

As part of the bilateral agreement, the White House said that China agreed to purchase 12 million metric tons of soybeans by the end of this year and 25 million tons annually over the next three years. Beijing, which has not confirmed these numbers, appears to have resumed purchasing soybeans from the United States recently. According to Reutersafter avoiding them for most of this year.

“These steps suggest that so far so good, but in reality, this is just the beginning,” said Wendy Cutler, senior vice president of the Asia Community Policy Institute. She added that although there are incentives for both sides to maintain the truce, “such de-escalation moves tend to be short-lived.”

China’s economy, affected by the long trade war with Washington, grew by 4.8% in the third quarter, its slowest rate in a year, down from 5.2% in the second quarter.

In a notice on Monday, China’s State Council 13 measures announced – Encouraging private investment in many major state-controlled industries.

China’s push for self-reliance amid “fierce international competition” at last month’s economic plenum was a sign that the leadership is linking growth goals more closely to strategic competition with the United States, said Neil Thomas, a China policy fellow at the Asia Society.

“Beijing is not seeking a big deal [but] “Seeking a truce to buy time and build influence,” Thomas added. He added that while Washington and Beijing prioritize self-reliance over interdependence, Xi is betting that his strategic design will outlast Trump’s.