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China has accused the US of “seriously violating” a trade truce between the two powers and vowed to take strong measures to defend its interests as tensions reignite.
China and the US agreed during talks in Geneva in early May to a deal that would temporarily reduce their tit-for-tat tariffs, which had soared as high as 145 per cent.
President Donald Trump on Friday claimed that China had “totally violated” the agreement, as US officials grew increasingly frustrated with the tepid pace of rare earth exports across the Pacific since the May 12 agreement.
But on Monday, China’s commerce ministry said it had upheld the deal and accused Washington of introducing “a series of discriminatory and restrictive measures” in recent weeks that undermined the Geneva consensus and harmed “China’s legitimate rights and interests”.
“If the US insists on going its own way and continues to harm China’s interests, China will continue to take strong and resolute measures to safeguard its legitimate rights,” the ministry said.
Among the US actions cited in the statement were warnings against the use of Huawei chips globally, a halt to sales of chip design software to Chinese firms, and the cancellation of visas for Chinese students.
The rise in tensions sent Asian markets down. Hong Kong’s Hang Seng index and Japan’s Nikkei 225 fell 1.5 per cent and 1.3 per cent, respectively. The offshore renminbi weakened 0.1 per cent to 7.21 a dollar. Stock markets in mainland China were closed for a public holiday.
US officials believed the May 12 deal would unwind China’s export restrictions on rare earths that it unveiled in early April, but China has instead kept its export regime in place while only slowly approving shipments to the US.
The critical minerals are widely used in American auto, electronics and defence supply chains with the slow pace of exports to the US posing a growing threat of work stoppages for US manufacturers.
“The US has unilaterally provoked new trade frictions,” China’s commerce ministry said. “Instead of reflecting on its own actions, it has groundlessly accused China of breaching the consensus,” the ministry added.
Trump told reporters on Friday he hoped to resolve the dispute in a call with Chinese President Xi Jinping, an idea he has floated several times in recent months, but which has yet to come to fruition.
US officials, including Treasury secretary Scott Bessent, on Sunday said they expected the two leaders to speak very soon. Bessent told CBS he was confident Trump and Xi would be able to iron out differences over rare earths in an upcoming phone call. White House officials have said the call should take place this week.
“What China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe, and that is not what a reliable partner does,” he said.
“The fact that they are withholding some of the products that they agreed to release during our agreement, maybe it’s a glitch in the Chinese system, maybe it’s intentional, we’ll see after the president speaks with the party chairman,” he said.
Additional reporting by Arjun Neil Alim
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