China on Sunday announced that it had reached a “basic consensus” with the United States on a potential trade agreement, just days before US President Donald Trump is set to meet Chinese President Xi Jinping in South Korea.

The announcement came after two days of high-level talks between Chinese Vice Premier He Lifeng and the US delegation led by Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer. The meetings were held on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur.

Constructive talks on tariffs and trade issues

According to China’s state news agency Xinhua, the discussions were “candid, in-depth, and constructive,” covering a wide range of economic and trade issues. These included tariffs, export controls, agricultural trade, and cooperation on fentanyl-related enforcement.

He Lifeng emphasised that the essence of China–US economic relations lies in “mutual benefit and win-win results,” adding that both countries “gain from cooperation and lose from confrontation.”

This marks one of the most significant diplomatic engagements between Beijing and Washington since tensions flared earlier this month over China’s export restrictions on rare earth materials, which are critical for industries such as electronics and defence manufacturing.

US signals easing of tariff threats

Following the talks, US Treasury Secretary Scott Bessent told CBS News that Trump’s threat of imposing an additional 100% tariff on Chinese goods “has gone away.”

“We had a very good two-day meeting,” Bessent said. “I would expect that the threat of the 100% [tariff] has gone away, as has the threat of China initiating a worldwide export control regime.”

The tariffs had originally been proposed by Trump in response to Beijing’s expanded export curbs on rare earth materials, which had sparked global supply concerns. The new understanding appears to have defused immediate escalation, with both sides now focusing on stabilising trade relations.

Broader diplomatic context

Trump arrived in Malaysia on Sunday for the ASEAN summit — the first stop of his five-day Asia tour — which will conclude with a meeting with Xi Jinping in South Korea on October 30.

Speaking to reporters ahead of the meeting, Trump struck an optimistic tone, saying, “I think we’re going to have a deal with China.”

Officials on both sides hope that the groundwork laid in Kuala Lumpur will pave the way for a formal trade framework to be announced during the Trump–Xi summit later this week.

Rare earths and global trade implications

The latest round of negotiations comes amid growing global concern over China’s dominance in the rare earths market. Beijing’s new export controls on rare earth magnets and minerals — vital components for semiconductors, batteries, and defence technology — have led to supply shortages and price volatility worldwide.

While the US and China have clashed over technology access and sanctions in recent months, this apparent breakthrough suggests a cooling of trade hostilities. Both nations had previously agreed to temporary truces in Geneva in May and August, which helped prevent disruptions in global supply chains.

Outlook

Analysts believe the “basic consensus” marks a symbolic but meaningful step toward de-escalation in one of the world’s most closely watched trade relationships. The upcoming Trump–Xi meeting is expected to clarify details of the agreement and determine whether the fragile progress can be turned into a comprehensive trade deal.