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WASHINGTON: US President Donald Trump on Wednesday (Jun 11) declared relations with China "excellent" after two days of trade talks yielded a framework agreement to preserve a fragile truce in their ongoing trade war.
Posting on Truth Social, Trump said: "Our deal with China is done," though he noted it still required final approval from Chinese President Xi Jinping and himself.
Under the agreement, China will supply rare earth minerals and magnets vital to US industries, while Washington will allow Chinese students to remain in American universities, a reversal from earlier threats to revoke their visas.
"President Xi and I are going to work closely together to open up China to American trade," Trump added in a follow-up post.
US Commerce Secretary Howard Lutnick said the talks in London were "totally on the right track", adding that Beijing would begin approving US magnet applications immediately after formal endorsement of the agreement. "We will lift measures once China acts," he said.
Treasury Secretary Scott Bessent, testifying before lawmakers, said that if China proves a reliable trade partner and fulfils its commitments, "the rebalancing of the world’s two largest economies is possible".
MARKETS RESPOND AS TARIFFS, INFLATION CONCERNS EASE
The announcement sparked modest gains across US financial markets. The Dow Jones rose 0.4 per cent to 43,022.73, while the S&P 500 and Nasdaq Composite each edged up 0.2 per cent.
Asian markets rallied earlier in the day, with Hong Kong’s Hang Seng Index climbing 0.8 per cent and Tokyo’s Nikkei 225 closing 0.6 per cent higher. London’s FTSE 100 ended up 0.1 per cent, while Paris and Frankfurt slipped slightly.
Traders were also buoyed by weaker-than-expected US inflation data for May. Consumer prices rose just 0.1 per cent from April, suggesting limited impact from recent tariffs. The core CPI reading, which excludes volatile food and energy prices, also undershot expectations.
"Risk appetite remained firm after the release of softer US inflation data, which boosted speculation that the Federal Reserve could cut interest rates sooner, possibly in September rather than October, and potentially twice before the year is out," said analyst Fawad Razaqzada of City Index and FOREX.com.
The dollar eased against major rivals, falling to 144.65 yen and 1.1488 dollars per euro, as traders priced in greater chances of near-term rate cuts.
Brent crude climbed 1.6 per cent to US$67.97 per barrel, while West Texas Intermediate added 1.9 per cent to US$66.24.
US Secretary of Commerce Howard Lutnick speaks to the media outside Lancaster House on the second day of US-China trade talks in London, Britain, Jun 10, 2025. (Photo: Reuters/Toby Melville)
RARE EARTHS AND STUDENT VISAS AT HEART OF DEAL
The US-China agreement centres on easing trade friction around critical sectors. In recent months, Washington had expressed concern over slowing Chinese exports of rare earths, a key input in electric vehicles, wind turbines and military technology, after Beijing required new export licenses for domestic producers.
Under the tentative deal, Beijing will ease these licensing restrictions, but only for six months, giving China leverage in the next phase of negotiations.
In response, Trump said China would now supply "full magnets, and any necessary rare earths" up front.
China, for its part, had pushed back against US threats to revoke student visas, and Trump’s announcement confirmed that those enrolled in American universities would be allowed to stay.
Tariff levels under the framework agreement remain unchanged: US goods entering China face 10 per cent duties, while Chinese exports to the US are subject to an effective 55 per cent rate, including previous and new measures.
The agreement follows a 90-day truce negotiated in Geneva last month, which reduced earlier tariffs of 145 per cent on Chinese goods and 125 per cent on US exports.
‘PROFESSIONAL, RATIONAL, CANDID’
Chinese Vice Premier He Lifeng, who led Beijing’s delegation in London, called the negotiations "professional, rational, in-depth and candid".
In a statement released by state broadcaster CCTV, He said the two sides should “continuously enhance consensus, reduce misunderstandings and strengthen cooperation” going forward.
Li Chenggang, China’s international trade representative, said both delegations recognised the importance of constructive dialogue. The deal marks the latest step in efforts to stabilise one of the world’s most consequential economic relationships amid broader geopolitical tensions.
Meanwhile, the World Bank cut its 2025 global growth forecast to 2.3 per cent, citing ongoing trade uncertainty, though it acknowledged the US-China progress as a positive signal. The US economy is now expected to grow 1.4 per cent this year, down from 2.8 per cent in 2024.
