MNI: China Advisors Positive Towards Stockholm Talks With U.S.

China and the U.S. are likely to extend their tariff truce out to October and advance discussions on purchases of American agricultural and energy products, as well as expanded investment opportunities, at this week’s talks in Stockholm, advisors told MNI, adding that both sides hope to pave the way for a potential meeting between Presidents Donald Trump and Xi Jinping later this year.

“Both sides are expected to extend the 90-day truce on the 24% reciprocal tariff set to end on Aug 12 by another three months during the third-round talks starting Monday, buying time to specify details of a potential trade deal,” said Zhao Yongsheng, a research fellow of the Institute of Regional and International Studies at the University of International Business and Economics. Zhao said Trump and Xi are likely to meet later this year, with a deal potentially signed during their summit.

A former Chinese official predicted a trade deal could be finalised by October, should the two leaders meet then, but the 10% baseline tariff on top of the suspended 24% reciprocal tariff on Chinese exports will likely remain in place. If the 20% fentanyl-related tariff is removed, keeping the effective tariff level at around 34%, that would be considered a relatively favourable outcome, he argued. Other U.S. trade partners face tariff rates of around 15%, making it unlikely that China would secure anything significantly lower, he added.

Zhao agreed that 34% would be ideal but that 54% would still be manageable given the cost advantage of China’s manufacturing sector. (See MNI: China Advisors Hopeful Of US Trade Deal By Mid-August)

PURCHASES AND INVESTMENTS

Zhao said the Stockholm meeting is expected to continue the framework laid out in June’s London talks, with more concrete details and quantities agreed on agricultural goods, liquefied natural gas, and Boeing orders, with the final scale dependent on the trade package’s overall structure.

A policy advisor, requesting anonymity, agreed China may increase agricultural and energy imports from the U.S., but said any significant boost could require concessions from Washington – specifically, a further easing of U.S. restrictions on high-tech exports. In return, China might expedite exports of rare earth minerals and magnets, the advisor noted. However, China should limit its use of rare earths as leverage, given its dependence on foreign equipment and maintenance, despite controlling over 90% of global processing capacity, the advisor warned.

Beyond correcting trade imbalances, China could commit to boosting domestic consumption and tackling industrial overcapacity – though these structural issues are unlikely to be resolved quickly, the former official added.

The U.S. could also request that China commit to increasing its American investments, pointing to the USD550 billion investment fund within the Japan-U.S. trade agreement, he said. Chinese firms, particularly manufacturers, may be willing to comply, given their already accelerating overseas expansion, the official said. 

However, Zhao noted that the U.S. remains wary of Chinese investment, viewing China more as a competitor, even as Beijing seeks to invest abroad amid a significant domestic capital surplus.

Another advisor warned that while the Stockholm talks are expected to proceed positively amid currently stable bilateral ties, the 2026 U.S. midterm elections could introduce fresh uncertainty and risk renewed deterioration in relations in future. (See MNI INTERVIEW2:China Needs Caution Over Quick Trump Deal – Liu)