US, China to hold trade talks on Monday...Chinese managers taking spots at US TikTok Shop...China issues rare earth licenses to top US automaker suppliers
US, China to hold trade talks on Monday
Top trade negotiators from the US and China are set to hold fresh talks in London on Monday, offering a glimmer of hope that the world’s two largest economies can defuse tensions over Chinese dominance in rare-earth minerals, reports Bloomberg. Both sides have accused the other of reneging on a deal in Geneva in May where they tried to start dialing back their trade war. Relations have spiraled since President Donald Trump’s return to the White House, stoking uncertainty for companies and investors.
China said Saturday it approved some applications for rare-earth exports, without specifying which countries or industries were involved—after Trump said Friday that Chinese leader Xi Jinping had agreed to restart the flow of minerals and magnets using the materials.
“We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before the beginning of April and we don’t want any technical details slowing that down,” Kevin Hassett, head of the National Economic Council at the White House, said Sunday on CBS’s Face the Nation. “And that’s clear to them.”
Chinese managers taking spots at US TikTok Shop
ByteDance, TikTok’s parent company, has been replacing US-hired staff near Seattle with managers connected to China, aiming to replicate its e-commerce success in Asia after sales fell short in America, reports Bloomberg.
TikTok Shop initially set a goal to increase its US e-commerce business tenfold last year to $17.5 billion in transaction volume, but had to drastically lower that objective, according to people familiar with the plan who spoke on the condition of anonymity because they were not authorized to talk publicly.
TikTok established its Shop business in the Seattle area near Amazon.com, the online retail giant it was aiming to displace. Meetings that used to be held in English are now often conducted in Mandarin and managers increasingly write in Chinese when communicating on Feishu, ByteDance’s internal Slack-like app, with English-speaking staff forced to rely on the built-in translation function.
China issues rare earth licenses to top US automaker suppliers
China has granted temporary export licenses to rare-earth suppliers of the top three US automakers, two sources familiar with the matter said, as supply chain disruptions begin to surface from Beijing's export curbs on those materials, reports Reuters. At least some of the licenses are valid for six months, the two sources said, declining to be named because the information is not public. It was not immediately clear what quantity or items are covered by the approval or whether the move signals China is preparing to ease the rare-earths licensing process, which industry groups say is cumbersome and has created a supply bottleneck.
China's decision in April to restrict exports of a wide range of rare earths and related magnets has tripped up the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
China's dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with US President Donald Trump. China produces around 90% of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those parts.
China regulators look to slow self-driving rollout
The rapid deployment of autonomous driving features on Chinese cars has sparked alarm among regulators in Beijing, who have made the industry tap on the brakes while they assess questions over safety and liability, reports the Financial Times. Despite an unclear legal framework for new assisted-driving technologies, nearly one in five new cars sold in China is now equipped with high-level autonomous functions.
Beijing officials, caught on the back foot, are expected to slow the rollout as they develop a regulatory framework for the new suite of technologies, where China is rapidly becoming a world leader.
“The cat is already out of the bag; they’re not going to try to put it back in,” said Tu Le, founder of the Sino Auto Insights consultancy. “But what regulators may do is limit use cases for the foreseeable future, until they have a much better understanding of the implications.”
SMIC offloads stake in Ningbo affiliate
Semiconductor Manufacturing International Corp (SMIC), mainland China’s largest contract chipmaker, has divested its entire stake in an unprofitable chip foundry operation amid a new wave of consolidation in the domestic integrated circuit (IC) industry, reports the South China Morning Post. Shanghai-based SMIC agreed to sell its 14.83% stake in Ningbo Semiconductor International (NSI) for RMB 57.01 ($7.94) per share to semiconductor design firm Goke Microelectronics, according to the chipmaker’s filing on Thursday. The deal’s total amount was not disclosed.
“This transaction will help the company focus on its core business,” SMIC said in the filing.
A separate filing on Friday by Shenzhen-listed Goke Microelectronics revealed the firm’s plan to buy more shares in NSI—headquartered in Ningbo, eastern Zhejiang province—from 10 other stakeholders to raise its stake to 94.37%, using a combination of cash and shares. The stakeholders include the China Integrated Circuit Industry Investment Fund, also known as the “Big Fund.”
Continuing conversations
China’s exports to the US fell 34.52% year-on-year in May, after a 21% drop in April. While these numbers are not fully representative of the situation due to transshipment and finding new alternate markets, the overall May export growth of 4.8% didn’t meet targets and the overall trend is negative.
China’s economy currently needs to have a bubbling export sector, given that it is struggling to boost consumption, and this is why today’s meeting between China and the US in London is so important. Both sides need a deal.