US-China talks nearing agreement for Trump, Xi to review: US trade envoy

Highlights:

• USTR Greer says talks setting up 'productive' Trump-Xi meeting
• World's two largest economies seek to avert trade war escalation
• Greer says broad range of topics discussed with China negotiators

The second day of trade talks between the US and China was paving the way for a "productive meeting" between President Donald Trump and President Xi Jinping, Washington's top trade envoy said in Kuala Lumpur on Sunday, raising hopes of a deal between the world's two largest economies.

US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng on the sidelines of the Association of Southeast Asian Nations for a fifth round of in-person discussions since May as both sides seek to de-escalate a trade war.

"I think that we're getting to a spot where the leaders will have a very productive meeting," Greer said as he stepped away from the talks to meet Trump. Also participating in the talks is China's top trade negotiator Li Chenggang.

Asked by a reporter if rare earths were discussed at the talks, which started on Saturday, Greer said a broad range of topics were discussed, including extending the truce on trade measures.

Both sides are looking to avert an escalation of their trade war after US President Donald Trump threatened new 100% tariffs on Chinese goods and other trade curbs starting on November 1, in retaliation for China's vastly expanded export controls on rare earth magnets and minerals.

TALKING POINTS

Trump arrived in the Malaysian capital on Sunday morning for the summit, his first stop in a five-day Asia tour that is expected to culminate in a face-to-face with Xi in South Korea.

A positive outcome for the Kuala Lumpur talks would remove roadblocks for the high-stakes meeting to take place on Oct 30.

While the White House has officially announced the highly anticipated Trump-Xi talks, Beijing has yet to confirm that the two leaders will meet.

Among Trump's talking points with Xi are Chinese purchases of US soybeans, concerns around democratically-governed Taiwan which Beijing views as its own territory, and the release of jailed Hong Kong media tycoon Jimmy Lai.

The detention of the founder of the now-defunct pro-democracy newspaper Apple Daily has become the most high-profile example of China's crackdown on rights and freedoms in the Asian financial hub.

Trump also said that he would seek China's help in Washington's dealings with Russia, as Moscow's war in Ukraine approaches its fourth year.

US Secretary of State Marco Rubio said on Sunday that the U.S will not walk away from Taiwan in return for trade benefits with China.

FRAGILE TRUCE

Tensions between the world's two largest economies flared in the past few weeks as a delicate trade truce - reached after their first round of trade talks in Geneva in May and extended in August - failed to prevent the two sides from hitting each other with more sanctions, export curbs and threats of stronger retaliatory measures.

The latest round of talks is likely to centre around China's expanded controls of rare earths exports that have caused a global shortage.

That has prompted the Trump administration to consider a block on "critical software" exports to China, from laptops to jet engines, according to a Reuters report.

A day before the talks commenced, the U.S launched a new tariff investigation into China's "apparent failure" to comply with the "Phase One" trade deal signed in 2020.

The new unfair trade practices probe bolsters Trump's toolkit against China.

Any agreement from Sunday's talks is likely to be fragile as the world's most important trade relationship, worth $660 billion a year, hangs in the balance.